According to the Expectations Theory of the Term Structure

question 33

Multiple Choice

According to the expectations theory of the term structure

• A)when the yield curve is steeply upward sloping,short-term interest rates are expected to remain relatively stable in the future.
• B)when the yield curve is downward sloping,short-term interest rates are expected to remain relatively stable in the future.
• C)investors have strong preferences for short-term relative to long-term bonds,explaining why yield curves typically slope upward.
• D)yield curves should be equally likely to slope downward as slope upward.

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Definitions:

Purchasing Power

The ability of an individual or group to buy goods or services, often considered in relation to the amount of goods or services that one's money can buy.

Urban Population

The segment of a country's population that resides within towns and cities as defined by governmental standards.

Population Growth

An increase in the number of people that reside in a country or region over a specific period of time.

Infrastructure

The fundamental facilities and systems serving a country, city, or area, including transportation and communication systems, water and power lines, and public institutions like schools and hospitals.