The Term Structure of Interest Rates States That

question 58

Multiple Choice

The term structure of interest rates states that

• A) terms of the loan have major effects on the interest rate.
• B) the long term interest rate is the geometric mean of the series of short term rates covering the same period.
• C) the long term rate would be higher than the individual short term rates in a rising interest rate environment.
• D) Both B and C are correct.

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Definitions:

Behavioral Approach

A psychological perspective emphasizing the study of observable behaviors and the effects of learning on behavior.

Psychology

An exploration of the workings of the human mind and its capabilities, with a strong emphasis on how these affect actions in particular environments.

Congenital Skeletal Anomaly

A skeletal irregularity or deformity that is present at birth, resulting from genetic factors or prenatal influences.

Developmental Effects

Impacts on the growth and development of an organism, often as a result of environmental factors or genetic conditions.