The Term Structure of Interest Rates

question 85

Multiple Choice

The term structure of interest rates

• A) is often referred to as the yield curve.
• B) depicts the relative level of short and long-term interest rates.
• C) is usually constructed with U.S. government securities of varying maturities.
• D) all of these.

---

Definitions:

Net Present Value

A method of evaluating the profitability of an investment, which calculates the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Financial Calculator

A specialized calculator designed specifically to perform financial functions, including interest rate calculations, investments, and amortizations.

Net Present Value

Net present value is the difference between the present value of cash inflows and outflows over a period, used to assess the profitability of an investment.

Discount Rate

The interest rate charged to commercial banks and other financial institutions for the loans they take from the Federal Reserve's discount window.