The Graphic Representation of the Term Structure of Interest Rates

question 21

Multiple Choice

The graphic representation of the term structure of interest rates is the _______________.

• A) forward rate
• B) volatility index
• C) yield curve
• D) expectations table
• E) None of the options are correct.

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Definitions:

Modified Duration

A measure indicating the sensitivity of a bond's price to changes in interest rates, estimating the percentage price change for a parallel shift in yield curves.

Yield

The income return on an investment, such as the interest or dividends received, expressed as an annual percentage of the investment's cost.

Market Efficiency

A concept that describes the degree to which stock prices and other securities' prices reflect all available, relevant information.