According to Expectations Theory, the Sudden Expectation of Lower Interest

question 35

Multiple Choice

According to expectations theory, the sudden expectation of lower interest rates in the future will cause a ____ supply of short-term funds provided by investors, and a ____ supply of long-term funds.

• A)large; large
• B)large; small
• C)small; small
• D)small; large

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Definitions:

Corporation

A corporation is a legal entity separate from its owners, offering limited liability protection, and has the ability to raise capital through the issuance of shares.

Business Organization

The structure and form that a business takes to conduct operations, ranging from sole proprietorships to corporations.

Privately Held Corporation

A company whose ownership is private, meaning its stock is not traded on public stock exchanges and is held by a limited group of shareholders.

New York Stock Exchange

A marketplace where securities, including stocks and bonds, are bought and sold.