Assume That the Expectations Theory of Term Structure Holds

question 27

Multiple Choice

Assume that the expectations theory of term structure holds.If the rate on a two-year Treasury bond is 8% and the rate on a three-year Treasury bond is 7%,what is the expected rate on a one-year Treasury bond in year three?

• A) 8%
• B) 7%
• C) 6%
• D) 5%
• E) 4%

---

Definitions:

Role Construct Repertory

A psychological test and theory that assesses how individuals understand and categorize their world and relationships through constructs.

Market Research

The process of gathering, analyzing, and interpreting information about a market, including information about potential customers, competitors, and the industry as a whole.

Industrial Settings

Workplaces related to the production of goods or services, often focusing on processes, efficiency, and worker behavior.

Cognitive Complexity

The ability to understand and process complex and multifaceted information, often reflected in nuanced and sophisticated thought patterns.