Suppose the Expectations Hypothesis Is True

question 26

Multiple Choice

Suppose the expectations hypothesis is true.The interest rate on a bond maturing in one year is 2%,and the interest rate on a bond maturing in two years is 3%.The interest rate that investors expect next year on a one-year bond is ________.

• A)2%
• B)3%
• C)4%
• D)5%

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Definitions:

Role-Sets

Concept in sociology referring to the array of roles and behaviors expected of an individual in a particular social position.

The Grapevine

An informal, unofficial, and personal communication network found within or across organizations, which is faster and more versatile than formal channels.

Informal Channel

A method of communication that occurs outside official or formal organizational structures, often relying on personal networks or social media.

Communication

The process of exchanging information, thoughts, messages, or speeches, either verbally or non-verbally, between two or more parties.