According to the Expectations Theory of the Term Structure

question 3

Multiple Choice

According to the expectations theory of the term structure

• A)the interest rate on long-term bonds will exceed the average of short-term interest rates that people expect to occur over the life of the long-term bonds,because of their preference for short-term securities.
• B)interest rates on bonds of different maturities move together over time.
• C)buyers of bonds prefer short-term to long-term bonds.
• D)buyers require an additional incentive to hold long-term bonds.

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Definitions:

Analytic Intelligence

One aspect of human intelligence that involves the ability to analyze, evaluate, judge, compare, and contrast information.

Intuitive

Referring to understanding or knowing something instinctively, without the need for conscious reasoning.

Strategic

refers to the careful planning and management of resources to achieve a specific goal or to gain an advantage.

Fluid Intelligence

The capacity to reason quickly and think abstractly, enabling problem solving and learning in novel situations.