The Unbiased Expectations Theory of the Term Structure of Interest

question 17

Multiple Choice

The unbiased expectations theory of the term structure of interest rates

• A)assumes that long-term interest rates are an arithmetic average of short-term rates.
• B)assumes that the yield curve reflects the market's current expectations of future short-term interest rates.
• C)recognizes that forward rates are perfect predictors of future interest rates.
• D)assumes that risk premiums increase uniformly with maturity.
• E)None of these.

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Definitions:

Multiaxial Classification

A system used in psychiatry that assesses multiple aspects of a patient's condition across several axes or domains.

DSM-IV-TR

The Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition, Text Revision, an older version of the manual that provides guidelines for diagnosing and treating mental disorders.

Gender Dysphoria

A psychological condition where an individual experiences discomfort or distress due to a mismatch between their gender identity and biological sex.

Paraphilic Disorders

These involve intense sexual interests or behaviors that deviate significantly from normative or socially accepted sexual preferences, causing distress or impaired functioning.