The ________ of the Term Structure States the Following: the Interest

question 37

Multiple Choice

The ________ of the term structure states the following: the interest rate on a long-term bond will equal an average of short-term interest rates expected to occur over the life of the long-term bond plus a term premium that responds to supply and demand conditions for that bond.

• A)segmented markets theory
• B)expectations theory
• C)liquidity premium theory
• D)separable markets theory

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Definitions:

Acadians

A group of French-speaking people from the Maritime provinces of Canada, whose ancestors were deported by the British in the 18th century.

Standard Deviation

An approach to assess the magnitude of spread or variation within a group of data points.

Normally Distributed

Refers to a statistical distribution that is symmetrical, with most observations clustering around the central peak and the probabilities for values further away from the mean tapering off equally in both directions.

MBA Degree

Master of Business Administration, a postgraduate degree focusing on business administration and investment management.