According to the liquidity premium theory of the term structure,
A) the interest rate on long-term bonds will equal an average of short-term interest rates that people expect to occur over the life of the long-term bonds plus a liquidity premium.
B) buyers of bonds may prefer bonds of one maturity over another, yet interest rates on bonds of different maturities move together over time.
C) even with a positive liquidity premium, if future short-term interest rates are expected to fall significantly, then the yield curve will be downward-sloping.
D) all of the above.
E) only A and B of the above.
D
You might also like to view...
Last year, Amanda Jones opened a candy store in a busy shopping center. She spent a lot on advertising and attracted many customers into the store, but very few customers made purchases and sales were declining. Amanda paid attention to questions and
requests made by customers and determined that they often requested items that were within the scope of her business but that she did not carry. When she offered to order items for her customers, delivery was usually too late and, again, sales were lost. What measures should Amanda take to improve her business?
Compare and contrast the five bases of power.
What will be an ideal response?
Which of the following best describes parallel processing?
A) A large number of similar products pass through an identical set of processes. B) Units typically pass through a series of manufacturing or producing departments. C) Partially completed units can be worked on simultaneously in different processes and then brought together in a final process for completion. D) Units must pass through one process before they can be worked on in later processes.
Leilani enters into a contract with Metro Taxi Company to work as a cabdriver. Under the plain meaning rule, if the contract's writing is clear and unequivocal, the meaning of the terms must be determined from A) only evidence not contained in the document
B) any relevant extrinsic evidence. C) only the face of the instrument. D) the later testimony of the parties.