Assume That the Expectations Theory Holds,and That Liquidity and Maturity

question 45

Multiple Choice

Assume that the expectations theory holds,and that liquidity and maturity risk premiums are zero.If the annual rate of interest on a 2-year Treasury bond is 10.5 percent and the rate on a 1-year Treasury bond is 12 percent,what rate of interest should you expect on a 1-year Treasury bond one year from now?

• A) 9.0%
• B) 9.5%
• C) 10.0%
• D) 10.5%
• E) 11.0%

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After 1680

A temporal marker indicating events or conditions following the year 1680.

Free Blacks

African Americans who were not enslaved, living in the United States before the abolition of slavery, often facing legal and social discrimination despite their status.

Slave Society

A society in which the institution of slavery plays a central role in the economic, social, and cultural aspects of life.

Chesapeake Region

An area in the United States characterized by its location around the Chesapeake Bay, often referring to parts of Virginia and Maryland.