Which One of the Following Statements Is True

question 32

Multiple Choice

Which one of the following statements is true?

• A) The expectations hypothesis indicates a flat yield curve if anticipated future short-term rates exceed the current short-term rate.
• B) The basic conclusion of the expectations hypothesis is that the long-term rate is equal to the anticipated long-term rate.
• C) The liquidity preference hypothesis indicates that,all other things being equal,longer maturities will have lower yields.
• D) The segmentation hypothesis contends that borrows and lenders are constrained to particular segments of the yield curve.
• E) None of these.

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Definitions:

Cognitive Dissonance

A psychological discomfort experienced when simultaneously holding two or more conflicting beliefs, ideas, or values.

Self-Serving Bias

A common cognitive bias where individuals attribute their successes to internal factors while blaming external factors for their failures.

Cognitive Component

Refers to the beliefs, thoughts, and knowledge that influence how an individual understands and interacts with the world.

Affective Component

Pertains to the emotional aspect of attitudes, reflecting feelings or emotions related to an object, person, or event.