The Theory of the Term Structure of Interest Rates, Which

question 58

Multiple Choice

The theory of the term structure of interest rates, which suggests that long-term rates are determined by the average of short-term rates expected over the time that a long-term bond is outstanding, is the

• A) expectations hypothesis.
• B) segmentation theory.
• C) liquidity premium theory.
• D) market average rate theory.

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Definitions:

Modeling

A psychological phenomenon where individuals learn and replicate behaviors observed in others.

Reinforcement

The desirable or undesirable stimuli that result from an organism’s behavior.

Genetic Mutations

Alterations in the DNA sequence that make up a gene, resulting in the gene functioning improperly or not at all.

Neurotransmitter Levels

The concentration of substances in the nervous system that transmit signals between neurons, affecting mood, sleep, concentration, and more.