A "Normal" Term Structure of Interest Rates Would Depict

question 129

Multiple Choice

A "normal" term structure of interest rates would depict

• A) short-term rates are higher than long-term rates.
• B) long-term rates are higher than short-term rates.
• C) no general relationship between short- and long-term rates.
• D) intermediate rates (one to five years) are lower than both the short-term and long-term rates.

---

Definitions:

Rules

Guidelines or principles governing conduct, operation, or procedure within a specific area or entity, designed to provide order and predictability.

Stakeholder Model

A theory of organizational management and business ethics that addresses the morality and values in managing an organization by considering all stakeholders involved.

Social Contract Theory

A philosophical theory which posits that individuals consent, either explicitly or tacitly, to surrender some of their freedoms and submit to an authority in exchange for protection of their remaining rights.

Fiduciary Responsibilities

Obligations of an individual or entity to act in the best interest of another party, especially when managing their assets.