When Referring to a "Downward Sloping" Yield Curve

question 40

Multiple Choice

When referring to a "downward sloping" yield curve:

• A) as maturities shorten, interest rates decline
• B) as maturities shorten, interest rates rise
• C) as maturities lengthen, interest rates remain the same
• D) as maturities lengthen, interest rates rise

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Definitions:

Representativeness Heuristic

A cognitive shortcut that involves judging the probability of an event by how much it resembles what we consider to be a typical example of that event.

Availability Heuristic

A quick-thinking process that depends on the first examples that pop into someone's head when they are considering a particular subject, idea, approach, or choice.

Relative Comparisons

The act of evaluating something in relation to another similar item.

Availability Heuristic

A cognitive shortcut that relies on the immediate examples that come to a person’s mind when evaluating a specific topic, concept, method or decision.