Three Theories Commonly Used to Explain the Term Structure of Interest

question 57

Multiple Choice

Three theories commonly used to explain the term structure of interest rates include all of the following EXCEPT

• A)the default risk theory
• B)the expectations theory
• C)the market segmentation theory
• D)the liquidity preference theory

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Definitions:

Independent Variables

In experimental research, variables that are manipulated or controlled by the researcher to study their effect on dependent variables.

Dependent Variable

The variable in experimental research that is expected to change as a result of manipulations to the independent variable.

Control Variable

A factor that is kept constant to accurately test the impact of an independent variable on a dependent variable in an experiment.

Placebo

A harmless substance with no therapeutic effect, used in controlled experiments to test the efficacy of treatments.