The Interest Rate on a Two-Year Security Will Continue to Adjust

question 289

Multiple Choice

The interest rate on a two-year security will continue to adjust until it is equal to

• A) half the interest rate on a one-year security.
• B) twice the interest rate on a one-year security.
• C) an average of the current one-year rate and the expected one-year rate for next year.
• D) the sum of the current one-year rate and the expected one-year rate for next year.

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Definitions:

Wage Rate

The amount of money paid to an employee for a specified quantity of work, typically expressed on an hourly, daily, or piecework basis.

Optimal Level

The most favorable point, level, or condition for achieving a specific goal or maximizing a specific outcome under given constraints.

Marginal Benefit

The boost in satisfaction or utility experienced by a consumer when consuming an extra unit of a good or service.

Immigration Law

Legal statutes and regulations that govern who can enter a country, how long they can stay, and what activities they can undertake while they are there.