A) the framework of how interest rates move over time. B) the relationship among interest rates of different bonds v the exact same maturity. C) the relationship among the term come maturity of different bonds. D) the relationship amongst interest prices on bond with various maturities.

The danger that attention payments will certainly not be made, or that the face value the a bond is not repaid when a bond matures is

A) interest rate risk. B) inflation risk. C) liquidity risk. D) default risk.

Bonds with no default risk space called

A) flower bonds. B) no-risk bonds. C) default-free bonds. D) zero-risk bonds.

Which of the adhering to bonds are thought about to it is in default-risk free?

A) municipal binding B) investment-grade bonds C) U.S. Treasury bond D) junk bond

U.S. Government bonds have actually no default threat because

A) they space issued in strictly minimal quantities. B) the federal government can increase taxes or print money to salary its obligations. C) they are backed v gold reserves. D) they deserve to be exchanged for silver at any kind of time.

The spread between the interest rates on bonds with default risk and default-free binding is called the

A) risk premium. B) junk margin. C) shortcut margin. D) default premium.

If the probability that a shortcut default increases because corporations start to suffer big losses, climate the default risk on that company bonds will certainly ________ and also the expected return on this bonds will ________, everything else organized constant.

You are watching: According to the expectations theory of the term structure

A) decrease; boost B) decrease; diminish C) increase; rise D) increase; diminish

A bond v default threat will always have a ________ hazard premium and rise in that is default threat will ________ the hazard premium.

A) positive; advanced B) positive; reduced C) negative; advanced D) negative; lower

If a corporation starts to suffer large losses, climate the default threat on the corporate shortcut will

A) increase and also the bond\"s return will become an ext uncertain, meaning the supposed return top top the that company bond will certainly fall. B) increase and also the bond\"s return will end up being less uncertain, definition the meant return top top the that company bond will fall. C) decrease and also the bond\"s return will become less uncertain, meaning the expected return on the this firm bond will fall. D) decrease and also the bond\"s return will come to be less uncertain, an interpretation the intended return ~ above the that company bond will rise.

If the opportunity of a default increases since corporations start to endure losses, then the default danger on corporate bonds will ________, and also the bonds\" returns will become ________ uncertain, definition that the expected return on this bonds will decrease, every little thing else hosted constant.

A) increase; less B) increase; more C) decrease; much less D) decrease; much more

Other points being equal, boost in the default threat of this firm bonds move the need curve because that corporate bonds come the ________ and also the demand curve because that Treasury bonds come the ________.

A) right; ideal B) right; left C) left; appropriate D) left; left

Other points being equal, a decrease in the default hazard of this firm bonds shifts the need curve for corporate bonds come the ________ and the demand curve for Treasury bonds come the ________.

A) right; best B) right; left C) left; appropriate D) left; left

A(n) ________ in the riskiness of that company bonds will certainly ________ the price of this firm bonds and ________ the productivity on that company bonds, all else equal.

A) increase; increase; boost B) increase; decrease; boost C) decrease; increase; rise D) decrease; decrease;decrease

An rise in the riskiness of corporate bonds will certainly ________ the price of corporate bonds and also ________ the price that Treasury bonds, everything else held constant.

A) increase; boost B) reduce; reduce C) reduce; increase D) increase; alleviate

A diminish in the riskiness of that company bonds will ________ the price of this firm bonds and also ________ the price of Treasury bonds, whatever else hosted constant.

A) increase; increase B) reduce; minimize C) reduce; rise D) increase; mitigate

An boost in the riskiness of that company bonds will certainly ________ the yield on corporate bonds and also ________ the yield on Treasury securities, everything else held constant.

A) increase; rise B) reduce; mitigate C) increase; minimize D) reduce; increase

A diminish in the riskiness of this firm bonds will certainly ________ the yield on corporate bonds and also ________ the yield on Treasury securities, whatever else held constant.

A) increase; increase B) decrease; diminish C) increase; diminish D) decrease; increase

An rise in default threat on corporate bond ________ the need for this bonds, however ________ the demand for default-free bonds, everything else hosted constant.

A) increases; lowers B) lowers; boosts C) does not change; greatly increases D) middle lowers; go not adjust

A decrease in default risk on corporate binding ________ the need for these bonds, and ________ the need for default-free bonds, whatever else held constant.

A) increases; lowers B) lowers; increases C) does not change; substantially increases D) center lowers; walk not adjust

As default threat increases, the meant return ~ above corporate bonds ________, and also the return becomes ________ uncertain, everything else hosted constant.

A) increases; less B) increases; more C) decreases; less D) decreases; more

As default danger decreases, the intended return on corporate binding ________, and also the return i do not care ________ uncertain, everything else hosted constant.

A) increases; much less B) increases; much more C) decreases; less D) decreases; an ext

As their relative riskiness ________, the supposed return on corporate binding ________ family member to the supposed return ~ above default-free bonds, every little thing else held constant.

A) increases; rises B) increases; decreases C) decreases; decreases D) decreases; walk not change

Which that the adhering to statements room TRUE?

A) A diminish in default threat on corporate bonds lowers the need for this bonds, however increases the demand for default-free bonds. B) The supposed return top top corporate bonds decreases as default danger increases. C) A this firm bond\"s return becomes much less uncertain as default risk increases. D) as their relative riskiness increases, the supposed return on corporate bonds increases relative to the intended return on default-free bonds.

Everything else hosted constant, if the federal federal government were to guarantee now that it will certainly pay creditors if a corporation goes bankrupt in the future, the interest rate on that company bonds will ________ and the interest rate on Treasury securities will certainly ________.

A) increase; increase B) increase; decrease C) decrease; boost D) decrease; decrease

Bonds with relatively high threat of default room called

A) Brady bonds. B) junk bonds. C) zero coupon bonds. D) invest grade bonds.

Junk bonds, bonds v a short bond rating, are likewise known as

A) high-yield bonds. B) invest grade bonds. C) high high quality bonds. D) zero-coupon bonds.

Bonds with reasonably low hazard of default are referred to as ________ securities and have a rating of Baa (or BBB) and also above; bonds v ratings below Baa (or BBB) have a higher default risk and also are called ________.

A) investment grade; reduced grade B) invest grade; junk binding C) high quality; lower grade D) high quality; junk binding

Which of the adhering to bonds would have actually the highest default risk?

A) municipal bond B) investment-grade bonds C) U.S. Treasury binding D) junk binding

Which that the following long-term bonds has actually the highest interest rate?

A) this firm Baa bonds B) U.S. Treasury bond C) corporate Aaa bonds D) municipal bond

Which of the complying with securities has the lowest interest rate?

A) junk bonds B) U.S. Treasury binding C) investment-grade bond D) corporate Baa bond

The spread in between interest prices on low high quality corporate bonds and U.S. Federal government bonds

A) widened substantially during the great Depression. B) narrowed substantially during the good Depression. C) small moderately throughout the great Depression. D) did not readjust during the great Depression.

During the great Depression year 1930-1933 there was a an extremely high rate of business failures and also defaults, us would mean the risk premium because that ________ bonds to be an extremely high.

A) U.S. Treasury B) corporate Aaa C) municipal D) this firm Baa

Risk premiums on this firm bonds tend to ________ during service cycle expansions and also ________ throughout recessions, whatever else organized constant.

A) increase; rise B) increase; diminish C) decrease; boost D) decrease; diminish

The fallen of the subprime mortgage market

A) did not impact the corporate shortcut market. B) raised the perceived riskiness of Treasury securities. C) lessened the Baa-Aaa spread. D) increased the Baa-Aaa spread.

The collapse of the subprime mortgage market raised the spread between Baa and default-free U.S. Treasury bonds. This is early out to

A) a palliation in risk. B) a palliation in maturity. C) a flight to quality. D) a trip to liquidity.

During a \"flight come quality\"

A) the spread in between Treasury bonds and also Baa binding increases. B) the spread in between Treasury bonds and also Baa binding decreases. C) the spread between Treasury bonds and Baa bond is not affected. D) the adjust in the spread in between Treasury bonds and Baa bonds cannot be predicted.

If you have a an extremely low tolerance for risk, i m sorry of the following bonds would certainly you be least likely to hold in her portfolio?

A) a U.S. Treasury shortcut B) a municipal bond C) a this firm bond with a rating of Aaa D) a corporate bond through a rating of Baa

Which of the adhering to statements is TRUE?

A) A liquid asset is one that deserve to be quickly and cheaply converted right into cash. B) The need for a bond declines when that becomes less liquid, to decrease the interest price spread in between it and relatively much more liquid bonds. C) The distinctions in bond interest prices reflect differences in default threat only. D) The corporate bond market is the most liquid link market.

Corporate bonds room not together liquid as government bonds because

A) fewer corporate bonds for any type of one corporation are traded, do them an ext costly come sell. B) the corporate bond rating have to be calculated every time they are traded. C) that company bonds room not callable. D) this firm bonds cannot be resold.

When the Treasury bond market becomes more liquid, other things equal, the need curve because that corporate bonds move to the ________ and also the need curve because that Treasury bonds move to the ________.

A) right; ideal B) right; left C) left; ideal D) left; left

When the Treasury bond industry becomes less liquid, other things equal, the need curve for corporate bonds shifts to the ________ and the demand curve because that Treasury bonds shifts to the ________.

A) right; appropriate B) right; left C) left; best D) left; left

A to decrease in the liquidity of that company bonds, other things gift equal, move the demand curve for corporate bonds to the ________ and the demand curve because that Treasury bonds shifts to the ________.

A) right; ideal B) right; left C) left; left D) left; appropriate

An increase in the liquidity of this firm bonds, various other things gift equal, shifts the demand curve because that corporate bonds to the ________ and also the need curve for Treasury bonds shifts to the ________.

A) right; right B) right; left C) left; left D) left; appropriate

A(n) ________ in the liquidity of that company bonds will certainly ________ the price of that company bonds and also ________ the productivity on corporate bonds, all else equal.

A) increase; increase; to decrease B) increase; decrease; decrease C) decrease; increase; boost D) decrease; decrease; decrease

An increase in the liquidity of this firm bonds will certainly ________ the price of corporate bonds and also ________ the productivity of Treasury bonds, every little thing else held constant.

A) increase; increase B) reduce; alleviate C) increase; minimize D) reduce; rise

A diminish in the liquidity of this firm bonds will certainly ________ the productivity of corporate bonds and also ________ the yield of Treasury bonds, whatever else hosted constant.

A) increase; boost B) decrease; decrease C) increase; to decrease D) decrease; increase

The threat premium on corporate bonds shows the fact that corporate bonds have a greater default risk and also are ________ U.S. Treasury bonds.

A) less liquid 보다 B) less speculative than C) tax-exempt unequal D) lower-yielding 보다

Which the the following statements is TRUE?

A) State and also local federal governments cannot default on your bonds. B) bonds issued through state and also local governments are referred to as municipal bonds. C) All federal government issued bonds—local, state, and federal—are federal earnings tax exempt. D) The coupon payment top top municipal bonds is usually greater than the coupon payment top top Treasury bonds.

Everything else organized constant, if the tax-exempt condition of municipal bonds to be eliminated, then

A) the interest rates on municipal bonds would certainly still be less than the interest rate on Treasury bonds. B) the interest price on municipal bonds would certainly equal the rate on Treasury bonds. C) the interest price on municipal bonds would certainly exceed the price on Treasury bonds. D) the interest prices on municipal, Treasury, and also corporate bonds would all increase.

Municipal bonds have actually default risk, yet their interest rates are reduced than the rates on default-free Treasury bonds. This says that

A) the benefit from the tax-exempt standing of municipal bonds is much less than your default risk. B) the benefit from the tax-exempt status of municipal bonds equals their default risk. C) the advantage from the tax-exempt status of municipal binding exceeds their default risk. D) Treasury bonds are not default-free.

Everything else organized constant, boost in marginal tax rates would likely have actually the effect of ________ the need for municipal bonds, and ________ the demand for U.S. Government bonds.

A) increasing; enhancing B) increasing; decreasing C) decreasing; enhancing D) decreasing; decreasing

Everything else hosted constant, a decrease in marginal tax prices would likely have actually the result of ________ the demand for municipal bonds, and also ________ the need for U.S. Federal government bonds.

A) increasing; increasing B) increasing; decreasing C) decreasing; raising D) decreasing; diminish

Everything else organized constant, the interest price on municipal bonds rises family member to the interest rate on Treasury securities when

A) revenue tax prices are lowered. B) income tax prices are raised. C) municipal binding become more widely traded. D) that company bonds come to be riskier.

Everything else held constant, if income tax rates were lowered, then

A) the interest price on municipal bonds would fall. B) the interest rate on Treasury bonds would rise. C) the interest rate on municipal bonds would rise. D) the price that Treasury bonds would certainly fall.

Everything else organized constant, abolishing the individual earnings tax will

A) boost the interest price on this firm bonds. B) reduce the interest price on municipal bonds. C) increase the interest rate on municipal bonds. D) increase the interest price on Treasury bonds.

Which that the following statements room TRUE?

A) boost in tax rates will increase the demand for Treasury bonds, lowering their interest rates. B) since the tax-exempt standing of municipal bonds to be of little benefit come bond holders when tax rates were low, they had greater interest rates than U.S. Government bonds before World battle II. C) Interest rates on municipal bonds will certainly be higher than equivalent bonds without the taxes exemption. D) because coupon payments on municipal bonds are exempt native federal income tax, the expected after-tax return ~ above them will be higher for people in lower earnings tax brackets.

The Obama administration increased the taxation on the top earnings tax bracket native 35% to 39%. Supply and also demand analysis predicts the impact of this readjust was a ________ interest price on municipal bonds and also a ________ interest price on Treasury bonds, every else the same.

A) higher; lower B) lower; lower C) higher; higher D) lower; higher

Three factors describe the risk framework of attention rates

A) liquidity, default risk, and also the income tax therapy of a security. B) maturity, default risk, and the revenue tax therapy of a security. C) maturity, liquidity, and also the earnings tax therapy of a security. D) maturity, default risk, and also the liquidity the a security.

The spread in between the interest prices on Baa that company bonds and U.S. Federal government bonds is very huge during the great Depression years 1930-1933. Define this distinction using the link supply and also demand analysis.


Answer: during the an excellent Depression plenty of businesses failed. The default threat for the corporate link increased compared to the default-free Treasury bond. The demand for this firm bonds diminished while the need for Treasury bonds enhanced resulting in a bigger risk premium.


If the federal federal government where come raise the income tax rates, would this have any influence on a state\"s price of get loan funds? Explain.


Answer: Yes, if the federal federal government raises income tax rates, need for municipal binding which room federal revenue tax exempt would certainly increase. This would lower the interest price on the municipal bonds for this reason lowering the expense to the state of borrowing funds.


The term framework of interest prices is

A) the relationship among interest rates of different bonds through the very same maturity. B) the structure of just how interest rates move over time. C) the relationship among the term come maturity of different bonds. D) the relationship among interest rates on binding with various maturities.

A plot the the interest prices on default-free government bonds with different terms come maturity is called

A) a risk-structure curve. B) a default-free curve. C) a yield curve. D) an interest-rate curve.

Differences in ________ explain why interest rates on Treasury securities are not every the same.

A) danger B) liquidity C) time come maturity D) tax qualities

The common shape for a productivity curve is

A) gently increase sloping. B) mound shaped. C) flat. D) bowl shaped.

When yield curves space steeply upward sloping

A) irreversible interest rates are over short-term interest rates. B) short-term interest rates are above long-term attention rates. C) short-term interest prices are about the same as long-term interest rates. D) medium-term interest prices are over both short-term and also long-term interest rates.

When yield curves space flat

A) permanent interest rates are over short-term interest rates. B) momentary interest prices are over long-term attention rates. C) momentary interest prices are about the exact same as long-term interest rates. D) medium-term interest rates are over both short-term and also long-term attention rates.

When productivity curves room downward sloping

A) permanent interest prices are over short-term attention rates. B) momentary interest prices are over long-term attention rates. C) short-term interest rates are around the exact same as irreversible interest rates. D) medium-term interest rates are above both short-term and also long-term interest rates.

Economists\" do the efforts to define the term structure of attention rates

A) illustrate how financial experts modify theory to boost them as soon as they are inconsistent with the empirical evidence. B) illustrate how economists proceed to accept theories that fail to define observed behavior of interest rate movements. C) prove that the real world is a special case that often tends to get brief shrift in theoretical models. D) have actually proved totally unsatisfactory come date.

According to the expectations theory of the ax structure, the interest rate on a long-term bond will certainly equal the ________ the the momentary interest prices that world expect to happen over the life the the long-term bond.

A) typical B) amount C) distinction D) multiple

If bond with different maturities space perfect substitutes, then the ________ on this bonds need to be equal.

A) supposed return B) surprised return C) surplus return D) overabundance return

If the expected course of one-year interest rates over the next five years is 4 percent, 5 percent, 7 percent, 8 percent, and 6 percent, then the expectations concept predicts the today\"s interest price on the five-year link is

A) 4 percent. B) 5 percent. C) 6 percent. D) 7 percent.

If the expected course of 1-year interest prices over the next 4 years is 5 percent, 4 percent, 2 percent, and also 1 percent, then the expectations theory predicts that today\"s interest rate on the four-year link is

A) 1 percent. B) 2 percent. C) 3 percent. D) 4 percent.

If the expected path of 1-year interest rates over the next five years is 1 percent, 2 percent, 3 percent, 4 percent, and also 5 percent, the expectations concept predicts that the bond v the highest possible interest price today is the one with a maturity of

A) two years. B) 3 years. C) four years. D) 5 years.

If the expected route of 1-year interest prices over the next five years is 2 percent, 4 percent, 1 percent, 4 percent, and also 3 percent, the expectations theory predicts that the bond through the lowest interest rate today is the one through a maturity of

A) one year. B) 2 years. C) 3 years. D) four years.

Over the following three years, the expected path of 1-year interest rates is 4, 1, and 1 percent. The expectations concept of the term framework predicts the the existing interest rate on 3-year bond is

A) 1 percent. B) 2 percent. C) 3 percent. D) 4 percent.

According come the expectations theory of the term structure

A) the interest rate on permanent bonds will exceed the mean of short-lived interest prices that human being expect to happen over the life that the long-term bonds, due to the fact that of their preference for temporary securities. B) interest prices on binding of various maturities move together over time. C) buyers the bonds like short-term to permanent bonds. D) buyers require secondary incentive to hold long-term bonds.

According to the expectations concept of the ax structure

A) as soon as the yield curve is steeply increase sloping, temporary interest prices are intended to remain fairly stable in the future. B) once the yield curve is bottom sloping, momentary interest rates are expected to remain reasonably stable in the future. C) investor have strong preferences for short-term loved one to irreversible bonds, explaining why yield curves typically slope upward. D) productivity curves have to be equally most likely to steep downward together slope upward.

According come the segmented industries theory that the hatchet structure

A) bonds of one maturity room close substitutes because that bonds of various other maturities, therefore, interest prices on bond of various maturities relocate together over time. B) the interest price for each maturity shortcut is determined by supply and also demand for that maturity bond. C) investors\" strong preferences for short-term family member to irreversible bonds defines why yield curves generally slope downward. D) since of the confident term premium, the yield curve will certainly not be it was observed to be downward-sloping.

According to the segmented industries theory the the hatchet structure

A) the interest rate on irreversible bonds will equal an median of momentary interest prices that human being expect to occur over the life the the irreversible bonds. B) buyers of bonds carry out not prefer bonds of one maturity over another. C) interest prices on bond of different maturities perform not relocate together end time. D) buyers require second incentive to host long-term bonds.

A key assumption in the segmented industries theory is the bonds of various maturities

A) room not substitutes at all. B) room perfect substitutes. C) room substitutes just if the investors is offered a premium incentive. D) are substitutes but not perfect substitutes.

The segmented markets theory deserve to explain

A) why yield curves usually have tendency to slope upward. B) why interest prices on bonds of various maturities have tendency to relocate together. C) why productivity curves often tend to steep upward as soon as short-term interest prices are low and to be inverted when short-term interest rates are high. D) why productivity curves have been supplied to forecast service cycles.

According to the liquidity premium concept of the ax structure

A) because buyers of bonds may prefer bond of one maturity end another, interest rates on bonds of various maturities carry out not relocate together over time. B) the interest rate on long-term bonds will certainly equal an typical of momentary interest rates that world expect to occur over the life the the permanent bonds plus a term premium. C) due to the fact that of the optimistic term premium, the productivity curve will not be it was observed to be downward sloping. D) the interest price for every maturity bond is figured out by supply and also demand for that maturity bond.

According come the liquidity premium theory of the ax structure

A) binding of various maturities room not substitutes. B) if productivity curves room downward sloping, then temporary interest prices are supposed to fall by so lot that, even when the hopeful term premium is added, long-term rates fall listed below short-term rates. C) yield curves must never steep downward. D) interest prices on binding of various maturities carry out not move together over time.

The added incentive that the purchaser of a Treasury defense requires come buy a long-term security fairly than a short-term defense is referred to as the

A) risk premium. B) ax premium. C) taxation premium. D) market premium.

If 1-year interest prices for the next three years space expected to it is in 1, 1, and also 1 percent, and the 3-year ax premium is 1 percent, 보다 the 3-year bond price will be

A) 1 percent. B) 2 percent. C) 3 percent. D) 4 percent.

If 1-year interest rates for the next five years room expected to be 4, 2, 5, 4, and 5 percent, and the 5-year hatchet premium is 1 percent, than the 5-year bond rate will be

A) 2 percent. B) 3 percent. C) 4 percent. D) 5 percent.

According come the liquidity premium concept of the hatchet structure, a steeply upward sloping productivity curve indicates that momentary interest rates are expected to

A) climb in the future. B) continue to be unchanged in the future. C) decline moderately in the future. D) decrease sharply in the future.

According to the liquidity premium concept of the term structure, a slightly upward sloping productivity curve indicates that short-term interest prices are supposed to

A) climb in the future. B) stay unchanged in the future. C) decrease moderately in the future. D) decline sharply in the future.

According to the liquidity premium theory of the ax structure, a level yield curve indicates that temporary interest rates are expected to

A) rise in the future. B) remain unchanged in the future. C) decline moderately in the future. D) decrease sharply in the future.

According come the liquidity premium concept of the ax structure, a downward sloping yield curve shows that temporary interest prices are supposed to

A) increase in the future. B) stay unchanged in the future. C) decrease moderately in the future. D) decline sharply in the future.

According come the liquidity premium theory, a productivity curve that is flat method that

A) bond purchasers expect interest prices to rise in the future. B) bond purchasers intend interest rates to continue to be the same. C) link purchasers intend interest prices to loss in the future. D) the productivity curve has actually nothing to carry out with expectation of link purchasers.

If the productivity curve is level for short maturities and also then slopes bottom for longer maturities, the liquidity premium theory (assuming a mild choice for shorter-term bonds) shows that the sector is predicting

A) a climb in short-lived interest prices in the close to future and a decline further the end in the future. B) constant short-term interest rates in the near future and also a decline further out in the future. C) a decline in temporary interest rates in the near future and also a rise additional out in the future. D) a decrease in short-term interest rates in the near future and an even steeper decrease further the end in the future.

If the yield curve steep is flat for brief maturities and also then slopes steeply upward for much longer maturities, the liquidity premium theory (assuming a mild choice for shorter-term bonds) suggests that the market is predicting

A) a increase in short-lived interest rates in the near future and also a decrease further out in the future. B) consistent short-term interest prices in the close to future and also further the end in the future. C) a decline in momentary interest rates in the close to future and also a rise further out in the future. D) consistent short-term interest prices in the close to future and also a decline further the end in the future.

If the productivity curve has actually a mild increase slope, the liquidity premium concept (assuming a mild preference for shorter-term bonds) suggests that the industry is predicting

A) a climb in short-lived interest rates in the close to future and also a decrease further out in the future. B) constant short-term interest prices in the close to future and further out in the future. C) a decrease in temporary interest prices in the near future and a rise additional out in the future. D) a decrease in short-lived interest rates in the near future and also an even steeper decrease further out in the future.

The desired habitat theory of the term framework is closely related come the

A) expectations theory of the hatchet structure. B) segmented industries theory the the term structure. C) liquidity premium concept of the ax structure. D) the inverted productivity curve theory of the ax structure.

The expectations theory and also the segmented sectors theory carry out not describe the facts very well, yet they provide the groundwork for the most widely welcomed theory the the term structure of interest rates

A) the Keynesian theory. B) the separable markets theory. C) the liquidity premium theory. D) the asset sector approach.

The ________ the the term structure of interest prices states the the interest price on a irreversible bond will equal the mean of temporary interest rates that people expect to happen over the life that the irreversible bond, and also investors have no choice for momentary bonds family member to irreversible bonds.

A) segmented sectors theory B) expectations theory C) liquidity premium theory D) separable sectors theory

According to this theory of the term structure, bond of various maturities room not substitutes because that one another.

A) segmented markets theory B) expectations concept C) liquidity premium concept D) separable industries theory

In really practice, momentary interest rates and also long-term interest prices usually move together; this is the major shortcoming of the

A) segmented markets theory. B) expectation theory. C) liquidity premium theory. D) separable sectors theory.

The ________ the the term structure says the following: the interest rate on a permanent bond will certainly equal an mean of momentary interest prices expected to happen over the life the the long-term bond add to a ax premium that responds to supply and demand conditions for that bond.

A) segmented industries theory B) expectations concept C) liquidity premium theory D) separable markets theory

A specifically attractive attribute of the ________ is that it speak you what the market is predicting around future momentary interest prices by just looking at the steep of the yield curve.

A) segmented sectors theory B) expectations theory C) liquidity premium concept D) separable sectors theory
\"*\"

The steeply increase sloping yield curve in the figure above indicates that

A) short-term interest rates are meant to rise in the future. B) short-lived interest prices are expected to loss moderately in the future. C) temporary interest prices are intended to loss sharply in the future. D) short-lived interest rates are intended to stay unchanged in the future.
\"*\"

The steeply increase sloping yield curve in the figure over indicates that ________ interest prices are supposed to ________ in the future.

A) short-term; rise B) short-term; autumn moderately C) short-term; remain unchanged D) long-term; autumn moderately
\"*\"

The U-shaped productivity curve in the figure over indicates that short-term interest rates are intended to

A) climb in the near-term and fall later on on. B) loss sharply in the near-term and also rise later on. C) loss moderately in the near-term and rise later on on. D) continue to be unchanged in the near-term and also rise later on on.
\"*\"

The U-shaped productivity curve in the figure over indicates the the inflation rate is meant to

A) remain constant in the near-term and fall later on on. B) autumn sharply in the near-term and rise later on. C) rise moderately in the near-term and fall later on. D) remain constant in the near-term and also rise later on on.
\"*\"

The mound-shaped yield curve in the figure above indicates that temporary interest rates are expected to

A) rise in the near-term and also fall later on. B) autumn moderately in the near-term and rise later on. C) loss sharply in the near-term and also rise later on on. D) remain unchanged in the near-term and fall later on.
\"*\"

The mound-shaped productivity curve in the figure over indicates the the inflation rate is supposed to

A) remain consistent in the near-term and fall later on on. B) loss moderately in the near-term and rise later on. C) climb moderately in the near-term and fall later on on. D) remain unchanged in the near-term and rise later on.

An inverted productivity curve predicts that short-term interest rates

A) room expected to rise in the future. B) will certainly rise and then fall in the future. C) will stay unchanged in the future. D) will loss in the future.

When short-lived interest rates are meant to autumn sharply in the future, the productivity curve will

A) steep up. B) be flat. C) be inverted. D) it is in an reverse U shape.

If investors intend interest rates to fall considerably in the future, the productivity curve will be inverted. This method that the productivity curve has a ________ slope.

A) steep increase B) slight upward C) flat D) bottom

When the yield curve is flat or downward-sloping, it imply that the economy is more likely to enter

A) a recession. B) one expansion. C) a eight time. D) a period of increasing output.

A ________ yield curve predicts a future rise in inflation.

See more: How Much Is 39 Out Of 50 ? = 78 39 Is What Percent Of 50

A) steeply increase sloping B) slight upward sloping C) level D) bottom sloping

If a greater inflation is expected, what would you intend to take place to the form of the productivity curve? Why?


Answer: The yield curve should have a steep upward slope. Nominal interest prices will boost if the inflation rate increases, therefore, bond purchasers will call for a higher term premium to hold the riskier long-term bond.