finance (structure of interest rates)

Some analysts believe that the term structure of interest reates is determined by the behavior of various types of financial institutions. this theory is called the:

A. expectations hypothesis
B. segmentation theory
C. liquidity premium theory
D. theory of industry supply and demand for bonds

The structure of interest rates is also know as the yield curve, so I like the expectations theory (A)

  1. 👍 0
  2. 👎 0
  3. 👁 241
asked by Jason
  1. In most environments the interest rate on bonds is high for long term bonds and lower for short term bonds. This is because in theory people are more nervous about lending money for longer periods of time because "anything might happen" in thirty years but if I loan the company the money for only one year I am more likely to get it back. Therefore I want higher interest for the long term bond. That sort of sounds like "expectations" to me, but I have no experience with this terminology.

    1. 👍 0
    2. 👎 0
    posted by Damon

Respond to this Question

First Name

Your Response

Similar Questions

  1. Financial Management

    1. Total asset turnover indicates the firm's a)liquidity. b)debt position. c)ability to use its assets to generate sales. d)profitability. 2. Some analysts believe that the term structure of interest rates is determined by the

    asked by Laura on October 6, 2008
  2. finance 3 questions

    Some analysts believe that the term structure of interest rates is determined by the behavior of various types of financial institutions. This theory is called the A. ANSWER Expectations hypothesis B. Segmentation theory C.

    asked by Jason on July 25, 2008
  3. investment

    Technical analysis differs from fundamental analysis in that a) Technical analysts contend that in depth assessments of basic aggregate market, industry, and company performance is necessary; past price movements indicate future

    asked by KATHY on July 15, 2007
  4. Math

    Term-structure of interest rates and Arbitrage The current term-structure of spot interest rates for safe zero-coupon bonds is as follows: Maturity, in years Interest rate (r) 1 8% 2 10% 3 11% 4 12% 5 13% There is a safe bond B

    asked by Robbie on December 3, 2011
  5. Algebra

    HELP ALGEBRA HOMEWORK 1. Classify -6x^5+4x^3+3x^2+11 by its degree. A) quinic B) cubic C) quartic D) quadratic 2. Write -2x^2(-5x2+4x^3) in standard form. A) -8x^5-20x^4 B) -8x^5+10x^4 C) -7x+2x^4 D) -7x^5-10x^4 3. Consider the

    asked by Can I get some help here? on October 16, 2019
  1. Finance

    Atlantic Seafood has determined that $17,000 is the break-even level of earnings before interest and taxes for the two capital structures it is considering. The one structure consists of all equity with 12,000 shares of stock. The

    asked by Maureen on October 28, 2013
  2. finance

    A "normal" term structure of interest rates would depict

    asked by Aloc on May 8, 2008
  3. finance part 2

    11. Whit a Subchapter S corporation A. corporate income is taxed as directed income to stockholders B. stockholders have the same liability as members of a partnership C. the number of stockholders is unlimited D. life of the

    asked by Jason on July 23, 2008
  4. Finance

    "The value of outstanding bonds change whenever the going rate of interest changes. In general, short-term interest rates are more volatile than long-term interest rates. Therefore, short-term bond prices are more sensitive to

    asked by Marsha on November 12, 2006
  5. Math

    The values of outstanding bonds change whenever the going rate of interest changes. In general, short-term interest rates are more volatile than long-term interest rates. Therefore, short-term bond prices are more sensitive to

    asked by Casey on November 13, 2009

More Similar Questions