Exam 5: The Term and Risk Structure of Interest Rates

According to the pure expectations approach to term structure, investors view securities with different maturities as

Using the pure expectations theory of term structure, a positively sloped yield curve indicates that investors expect

If the following securities are of equal maturity, which will have the lowest yield at a given point in time?

According to the expectations theory of term structure, if next year's short-term interest rate is expected to be above the current short-term rate, the

A negatively sloped yield curve indicates that the economy

Investors usually __________, because long-term securities have a greater risk of capital loss than do short-term securities.

When yields are expected to __________ in the future, investors prefer __________ long-term securities.

When the supply of a security __________, the yield on the security __________.

The relationship between yield and maturity of the same type of security is known as the

The yield curve depicts the relationship between

As a factor explaining yield differences among U.S. government bonds, default risk is

If the yield on long-term securities is greater than the yield on comparable short-term securities, the yield curve will be

A graphic depiction of the relationship between yield and maturity is

The supply-demand approach to explaining the term structure of interest rates assumes that

The most actively traded government securities in the secondary market are

Which of the following is not a theory used to explain the term structure of interest rates?

The supply and demand approach to term structure assumes that securities with different maturities are

Which of the following types of government bonds tend to be the most marketable?

Using the pure expectations theory of term structure, a negatively sloped yield curve indicates that investors expect

The formula for relating the percentage change in price to the bond duration is