If Shorter-Term Securities Have Higher Annualized Yields Than Longer-Term Securities

question 25

Multiple Choice

If shorter-term securities have higher annualized yields than longer-term securities, the yield curve

• A)is horizontal.
• B)is upward sloping.
• C)is downward sloping.
• D)cannot be determined unless we know additional information (such as the level of market interest rates).

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Definitions:

Ex Post Facto

A research design that examines the effects of an independent variable on a dependent variable after the event has occurred.

Random Assignment

A method in experimental design where study participants are allocated to different groups on a random basis to reduce bias.

Experimental

Relating to a controlled study involving variables manipulated to determine cause-and-effect relationships.

Longitudinal

Describes research or analysis that takes place over a long period of time, observing the same subjects to detect changes or developments.