If the Expected Path of Interest Rates on One-Year Bonds

question 55

Multiple Choice

If the expected path of interest rates on one-year bonds over the next five years is 2%, 4%, 3%, 2%, and 1%, the expectations theory predicts that the bond with the lowest interest rate today is the one with a maturity of

• A)one year.
• B)two years.
• C)three years.
• D)five years.

---

Definitions:

Evidence-Based Management

An approach to making managerial decisions and organizational practices grounded in the best available scientific evidence.

Good Evidence

Reliable and relevant information or facts that support a conclusion, decision, or belief.

Big Data

Pertains to incredibly vast collections of data which can be examined through computational methods to uncover patterns, trends, and connections, particularly those concerning human behavior and interactions.

Decision Making

The process of mentally picking an action to take from a set of different possibilities.