According to the Expectations Theory of the Term Structure

question 57

Multiple Choice

According to the expectations theory of the term structure,

• A) when the yield curve is steeply upward-sloping, short-term interest rates are expected to rise in the future.
• B) when the yield curve is downward-sloping, short-term interest rates are expected to decline in the future.
• C) buyers of bonds prefer short-term to long-term bonds.
• D) all of the above.
• E) only A and B of the above.

---

Definitions:

Camouflage

A method or pattern used by animals and military forces to blend with their environment to conceal themselves from predators or enemies.

Ambush

A surprise attack by people lying in wait in a concealed position.

Positive Feedback Loop

A process that occurs in a system where the output enhances or amplifies the initial condition, leading to an increase in the effect.

Co-operation

The process of groups or entities working together towards a common goal, often leading to mutual benefit or success.