Under the Expectations Hypothesis of the Term Structure of Interest

question 22

Essay

Under the Expectations Hypothesis of the term structure of interest rates, explain the impact of a U.S.Treasury decision to phase out the 30-year bond and to only focus on 3-month, 1-year, 5-year and 10-year bonds.

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Definitions:

Business Expense

Costs incurred in the ordinary course of running a business, including salaries, utilities, and rent, which are deductible for tax purposes.

Vehicle Expense

Costs associated with the operation and maintenance of a vehicle, which may include fuel, repairs, insurance, and depreciation.

Currency Exchange Rates

The worth of a particular currency when measured in a different currency.

School District

A geographical unit for the local administration of elementary or secondary schools.