Use the Table for the Question(s)below

question 40

Multiple Choice

Use the table for the question(s) below.
Suppose the term structure of interest rates is shown below:

-What is the shape of the yield curve and what expectations are investors likely to have about future interest rates?

• A)inverted; higher
• B)normal; higher
• C)inverted; lower
• D)normal; lower
• E)flat; unchanged

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Definitions:

Standard Deviation

A means to quantify the range of scattering or divergence in a dataset.

Normal Distribution

A bell-shaped probability distribution that is symmetrical about its mean, describing how variables are distributed, indicating that most of the observations cluster around the central peak and the probabilities for values further away from the mean taper off equally in both directions.

Continuous Uniform Probability Distribution

A type of probability distribution where all outcomes in a continuous range are equally likely.

Rectangular

Pertaining to a shape or object whose surface has four right angles and the opposite sides are parallel and equal in length.