The Term Structure of Interest Rates

question 36

Multiple Choice

The term structure of interest rates

• A) is not an indication of investors' expectations about inflation and future interest rates.
• B) will be upward sloping if short-term interest rates are higher than long-term rates.
• C) will be downward sloping under normal conditions.
• D) none of the other answers are correct

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Definitions:

Critical Value

The threshold value that the test statistic must exceed for the null hypothesis to be rejected, dependent on the chosen significance level.

Alternative Hypothesis

A statement that contradicts the null hypothesis and proposes there is indeed a significant effect or relationship between variables.

Sample Sizes

The number of observations or subjects included in a study from which conclusions are drawn.

Test Statistic

A calculated value from sample data, used in statistical hypothesis testing to determine whether to reject the null hypothesis.