Which Fact About the Term Structure Is the Expectations Theory

question 107

Multiple Choice

Which fact about the term structure is the expectations theory unable to explain?

• A) Why interest rates on bonds with different terms to maturity tend to move together over time.
• B) Why yields on short-term bonds are more volatile than yields on long-term bonds.
• C) Why longer-term yields tend to be higher than shorter-term yields.
• D) Why long-term bond yields are influenced by expected future short-term bond yields.

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Definitions:

Cognitive Development

The study of how thinking, problem solving, and intelligence evolve from childhood through adulthood.

Psychosocial Development

Erikson's theory that individuals pass through eight developmental stages, each characterized by a different psychological crisis.

Initiative Versus Guilt

Initiative versus guilt is a stage in Erik Erikson's theory of psychosocial development, where children aged 3 to 5 years learn to initiate activities and interact with others or experience guilt for their actions and thoughts.

Erikson

A reference to Erik Erikson, a developmental psychologist known for his theory on the psychological stages of human development.