When Long-Term Rates Are Lower Than Short-Term Rates, the Market

question 117

True/False

When long-term rates are lower than short-term rates, the market is signaling that it expects short-term rates to fall.

---

Definitions:

February Put

An options contract giving the holder the right but not the obligation to sell a specified amount of an underlying asset at a predetermined price on or before a specified date in February.

Call Option

A financial contract giving the buyer the right but not the obligation to purchase a stock, bond, commodity, or other asset at a specified price within a certain time frame.

Exercise Price

The price at which an option holder can buy or sell the underlying security, determined at the time the option is issued.

Intrinsic Value

The actual, inherent worth of a financial asset, not influenced by its market price, often based on underlying fundamentals.