If Interest Rates on One-Year Bonds Are Expected to Stay

question 47

Short Answer

If interest rates on one-year bonds are expected to stay at 3% and the term premium is 1%, what would the yield curve look like?

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Definitions:

Proportions

The relationship or ratio between different elements or components, often relating to size, quantity, or degree.

Fractions

A mathematical expression representing the division of one quantity by another, indicating a part of a whole number.

Percentages

A mathematical concept representing a part of a whole as fractions of 100.

Ratios

A mathematical relation between two numbers showing how many times the first number contains the second.