The Expectations Hypothesis Suggests The

question 98

Multiple Choice

The expectations hypothesis suggests the:

• A) yield curve should usually be downward sloping.
• B) yield curve should usually be upward sloping.
• C) slope of the yield curve reflects the risk premium associated with longer-term bonds.
• D) slope of the yield curve depends on the expectations for future short-term rates.

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Definitions:

Independent Variable

A variable in an experiment or model that is manipulated to observe its effect on the dependent variable.

Dependent Variable

A variable in experimental and statistical modeling whose value is dependent on the influence of another variable (the independent variable).

Coefficient Of Determination

A statistic that indicates the proportion of the variance in the dependent variable that is predictable from the independent variable(s).

Estimated Regression Equation

A formula that represents the relationship between dependent and independent variables and is used to predict the value of the dependent variable.