The Term Structure of Interest Rates

question 33

Multiple Choice

The term structure of interest rates

• A) is often referred to as the yield curve.
• B) depicts the relative level of short- and long-term interest rates.
• C) is usually constructed with U.S. government securities of varying maturities.
• D) All of the options are true.

---

Definitions:

Floating Exchange Rate

A currency system where the value of a currency is allowed to fluctuate according to the foreign exchange market.

Discount Rate

The interest rate a central bank charges commercial banks to borrow money.

Premium Rate

Refers to the higher price or rate charged for goods or services perceived to be of higher quality, or in the case of telecommunications, services that offer added value beyond the basic rate.

Exchange Rate

The value at which one currency can be exchanged for another, affecting international trade and economics.