A one-year bond currently pays 5% interest. It's expected that it will pay 4.5% next year and 4% the following year. The two-year term premium is 0.2% while the three-year term premium is 0.35%
What is the interest rate on a two-year bond according to the liquidity premium theory? A) 4.5%
B) 4.75%
C) 4.95%
D) 4.975%
C
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The currency deposit ratio, c, is 0.10. The reserve requirement, rr, is 0.07. The excess reserve ratio, e, is 0.10. What is the size of the money multiplier?
A) 4.70 B) 4.07 C) 4.75 D) 4.00
According to the simple circular flow concept, whenever planned investment is less than planned saving
a. total output and/or prices rise. b. total output and/or prices fall. c. prices fall and total output rises. d. prices rise and total output falls.
When supply and demand for a product decrease simultaneously, we
A. can predict that both equilibrium price and quantity will increase. B. cannot predict the change in either the equilibrium quantity or equilibrium price. C. can predict that both equilibrium price and quantity will decrease. D. cannot predict equilibrium price, but know that equilibrium quantity will decrease.
Establishing different prices for similar products to reflect differences in marginal cost in providing those goods to different groups of buyers is
A) price discrimination. B) cost-plus pricing. C) price differentiation. D) product differentiation.