In General,an Upward-Sloping Term Structure Implies That Investors Expect Future

question 57

Multiple Choice

In general,an upward-sloping term structure implies that investors expect future short-term interest rates to:

• A)decrease.
• B)increase.
• C)be the same as the current rate.
• D)increase by a minimum of 5bp.

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Definitions:

Unit Tax

A tax that is imposed on a product based on a fixed amount per unit, rather than a percentage of the price.

Output

The cumulative quantity of products or services generated by a business, sector, or economic system over a given timeframe.

Profit

The financial gain achieved when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain it.

Demand Schedule

A table or graph showing the quantity of a product that consumers are willing and able to purchase at various prices during a specified period.