Assume That a Yield Curve Is Influenced by Interest Rate

question 11

Multiple Choice

Assume that a yield curve is influenced by interest rate expectations and a liquidity premium. Assume the yield curve is initially flat. If liquidity suddenly was no longer important, the yield curve would now have a ____ (assuming no other changes) .

• A)slight downward slope
• B)slight upward slope
• C)steep upward slope
• D)steep downward slope

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Definitions:

Blind Spot

An area in the visual field that lacks detection due to the absence of photoreceptor cells in the optic disc of the retina.

Brain

The organ in the head of an organism that controls its actions, thoughts, feelings, and interactions with the environment.

Fovea

A small depression in the retina of the eye where visual acuity is highest, due to the concentration of cones.

Rods

are photoreceptor cells in the retina of the eye that are responsible for vision at low light levels.