The Unbiased Expectations Theory of the Term Structure of Interest

question 60

Multiple Choice

The unbiased expectations theory of the term structure of interest rates

• A)assumes that long-term interest rates are an arithmetic average of short-term rates.
• B)assumes that the yield curve reflects the market's current expectations of future short-term interest rates.
• C)recognizes that forward rates are perfect predictors of future interest rates.
• D)assumes that risk premiums increase uniformly with maturity.
• E)None of the above.

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Definitions:

Anterior Fontanel

The soft spot on the top of a baby's head where the skull bones have yet to fuse.

Sagittal Suture

The fibrous connective tissue joint between the two parietal bones of the skull, running anteroposteriorly from the fontanelle to the occiput.

Anterior Cruciate Ligament

A key ligament located in the knee joint that connects the thigh bone (femur) to the shin bone (tibia), helping to stabilize the knee.

Posterior Cruciate Ligament

A ligament in the knee that connects the femur to the tibia, helping to stabilize the knee joint.