Assume That Annualized Yields of Short-Term and Long-Term Securities Are

question 18

Multiple Choice

Assume that annualized yields of short-term and long-term securities are equal. If investors suddenly believe interest rates will increase, their actions may cause the yield curve to

• A)become inverted.
• B)become flat.
• C)become upward sloping.
• D)be unaffected.

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Definitions:

Occasional Stress

Stress experienced at irregular intervals or only under particular circumstances.

Normal Reaction

A typical or expected response to a specific stimulus or situation based on common experience.

College Student

An individual enrolled in an institution of higher education to pursue a degree or certification.

Junk Food

Food items that are high in calories but low in nutritional value, often containing high levels of sugar, salt, and fat.