Use the Following Figure to Answer the Question

question 67

Multiple Choice

Use the following figure to answer the question :

-The U-shaped yield curve in the figure above indicates that the inflation rate is expected to

• A)remain constant in the near-term and fall later on.
• B)fall sharply in the near-term and rise later on.
• C)rise moderately in the near-term and fall later on.
• D)remain constant in the near-term and rise later on.

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Definitions:

Preemptive Rights

A stockholder’s right to maintain her proportionate ownership in a corporation. The stockholder has the right to buy a share of any newly issued stock that is proportionate to her fractional ownership of the company before the new issue. The right is not a matter of law but must be written into the corporation’s bylaws.

Proportionate Ownership

Ownership shares in a company or asset divided among investors in proportion to their investment.

Efficient Markets

A financial market hypothesis suggesting that asset prices fully reflect all available information, making it impossible to consistently achieve higher-than-average returns.

Informed Markets

Markets where all participants have access to all relevant information, leading to more efficient price determination.