Assume That the Current Yield Curve Is Upward Sloping or Normal

question 50

Multiple Choice

Assume that the current yield curve is upward sloping or normal. This implies that:

• A)short-term interest rates are more volatile than long-term rates.
• B)inflation is expected to subside in the future.
• C)the economy is at the trough of a business cycle.
• D)long-term bonds are less attractive to investors than short-term bonds.
• E)short-term interest rates are lower than the long-term interest rates.

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Definitions:

Observations

Data points or values collected during an experiment or survey.

Multiple Coefficient

A broader term potentially indicating coefficients in multiple regression that represent the relationship between explanatory variables and the response variable.

Determination

Often associated with the coefficient of determination (R-squared), it measures the proportion of variance in the dependent variable predictable from the independent variable(s).

Degrees of Freedom

The number of independent values or quantities that can vary in an analysis without breaking any constraints.