You Are Having a Conversation with Your Friend Yvonne About

question 8

Multiple Choice

You are having a conversation with your friend Yvonne about the upward-sloping yield curve that currently exists in the bond market. She explains this to you by saying that the upward slope to the yield curve is because the market expects future short-term interest rates to be higher than current interest rates. Her observation means that she is a proponent of the __________ theory of interest rates.

• A)term premium
• B)default premium
• C)pure expectations
• D)segmented market

---

Definitions:

Legal Authority

The lawful right given to an individual or body to make decisions, to command, or to judge matters according to law.

Manufacturer

A company or individual that makes goods for sale, typically involving large-scale production using machinery.

Marketing Channel

Pathways or routes through which goods and services travel from the producer or manufacturer to the end consumer, possibly including intermediaries.

Product

An item or service created through a process and available for exchange or sale to satisfy a need or want.