According to the Expectations Hypothesis

question 18

Multiple Choice

According to the Expectations Hypothesis:

• A)when short-term interest rates are expected to rise in the future, the long-term interest rates are equal to current short-term interest rates.
• B)when short-term rates are expected to remain constant in the future, the long-term interest rates are higher than current short-term interest rates.
• C)short-term bonds are perfect substitutes for long-term bonds.
• D)expectations of future short-term rates equal estimates of current short-term rates.

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Definitions:

Accurate Information

Information that is correct, precise, and free of errors.

Interrater Reliability

An indicator of reliability that examines the agreement of observations made by two or more raters (judges).

Alternate Forms Reliability

Assessment of reliability by administering two different forms of the same measure to the same individuals at two points in time.

Split-half Reliability

A measure of consistency where a test is divided into two parts and the scores on both halves are compared to assess the test's reliability.