The Current Market Interest Rate for Two-Year Maturity Bond Is

question 2

Multiple Choice

The current market interest rate for two-year maturity bond is 10%.The forward rate for a one year investment starting in one year from now is 8%.According to the expectations theory of term structure,the current one year maturity market interest rate is:

• A)smaller than 8%.
• B)larger than 10%.
• C)equal to 9%.
• D)equal to 8%.

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Definitions:

Internal Locus

An individual's belief that they have control over their life events and outcomes, as opposed to external forces having that control.

External Locus

Refers to an external locus of control, where individuals believe their success or failure is due to external factors beyond their control.

High Self-Esteem

A confident and positive perception of oneself, marked by self-respect and self-worth.

Individual Differences

Refers to the distinct variations among people in their abilities, personalities, learning styles, and other characteristics.