Some Analysts Believe That the Term Structure of Interest Rates

question 27

Multiple Choice

Some analysts believe that the term structure of interest rates is determined by the behavior of various types of financial institutions. This theory is called the

• A) expectations hypothesis.
• B) market segmentation theory.
• C) liquidity premium theory.
• D) theory of industry supply and demand for bonds.

---

Definitions:

Small Amount

A quantity that is less than average or nominal, often referring to a minimal or insignificant portion of something.

Opinion

A belief or judgment that rests on grounds insufficient to produce complete certainty.

Cognitive Dissonance

The discomfort in one's mind arising when an individual simultaneously holds multiple conflicting beliefs, ideas, or values.

Political Candidate

An individual who offers themselves for election to a political office or position within a government.