According to the Expectations Theory of the Term Structure

question 3

Multiple Choice

According to the expectations theory of the term structure

• A)the interest rate on long-term bonds will exceed the average of short-term interest rates that people expect to occur over the life of the long-term bonds,because of their preference for short-term securities.
• B)interest rates on bonds of different maturities move together over time.
• C)buyers of bonds prefer short-term to long-term bonds.
• D)buyers require an additional incentive to hold long-term bonds.

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Definitions:

Masseter

A facial muscle that plays a major role in the chewing of solid foods, one of the strongest muscles in the human body.

Semitendinosus

A muscle in the back of the thigh, part of the hamstring group.

Gastrocnemius

A large muscle located on the back portion of the lower leg, forming part of the calf, that aids in walking, running, and jumping.

Biceps Femoris

A muscle of the thigh that is part of the hamstrings, involved in knee flexion and thigh extension.