Which Statement About Interest Rates Is True

question 172

Multiple Choice

Which statement about interest rates is true?

• A) The prime rate equals the overnight rate plus 3 percent.
• B) Long-run interest rates tend to be higher than short-run interest rates.
• C) Short-run bonds tend to be riskier than long-run bonds.
• D) Investors require a higher reward for bonds with more liquidity.
• E) Long-run interest rates fluctuate more than short-run interest rates.

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Definitions:

Deseasonalizing

The process of removing the seasonal components of data to analyze and forecast trends more accurately.

Regression Analysis

is a statistical method for investigating and modeling the relationship between variables.

Dependent Variable

The factor in a model or experiment predicted to vary as a result of modifications in the independent variables.

Seasonal Index

A measure that quantifies the predictable fluctuation in activity or values according to the season or time of the year.