According to the Expectations Hypothesis, If Investors Believed That, for a Given

question 100

Multiple Choice

According to the expectations hypothesis, if investors believed that, for a given holding period, the average of the expected future short-term yields was greater than the long-term yield for the holding period, they would act so as to drive:

• A) down the price of the short-term bond and drive up the price of the long-term bond.
• B) up the price of the short-term bond and drive down the price of the long-term bond.
• C) up the prices of both the short- and long-term bonds.
• D) down the prices of both the short- and long-term bonds.

---

Definitions:

Diversity

The inclusion of individuals with a variety of characteristics, such as different ethnicities, genders, ages, abilities, and backgrounds, in a group or organization.

Defined Benefit Program

A retirement plan where employee benefits are calculated based on a formula considering factors like salary history and duration of employment.

Income Level

The amount of monetary compensation received by an individual or household from various sources, often used as an indicator of economic status or standard of living.

Company's Profit

The financial gain made by a business after subtracting all expenses, taxes, and costs from total revenue.