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LOS c, (Part 2): Describe the implications of each theory for the shape of the yield curve.
Q1. Generally speaking, an upward-sloping yield curve can be expected when:
A) the supply of long-term funds falls short of demand and investors begin to show a preference for more liquid/less risky short-term securities.
B) the supply of long-term funds falls short of demand.
C) inflationary expectations are beginning to subside and investors begin to show a preference for more liquid/less risky short-term securities.
Q2. The liquidity preference theory of the term structure of interest rates implies that the shape of the yield curve should be:
A) variable.
B) upward-sloping.
C) flat or humped.
Q3. If the slope of the yield curve begins to rise sharply, it is usually an indication that:
A) stocks are offering abnormally high rates of return.
B) the rate of inflation is starting to increase or is expected to do so in the near future.
C) the Fed has been aggressively driving up short-term interest rates.
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发表于 2009-3-2 17:07
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