349 mid summer2 2013 mc sol

349 mid summer2 2013 mc sol

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Unformatted text preview: erefore, interest rates on bonds of different maturities move together over time C) investorsʹ strong preferences for short-term relative to long-term bonds explains why yield curves typically slope downward D) the interest rate for each maturity bond is determined by supply and demand for that maturity bond 10) ______ 11) ______ 12) ______ 13) ______ 14) ______ 15) ______ 16) ______ 17) ______ 18) ______ 19) If the yield curve slope is flat for short maturities and then slopes steeply upward for longer maturities, the liquidity premium theory (assuming a mild preference for shorter-term bonds) indicates that the market is predicting ________. A) a rise in short-term interest rates in the near future and a decline further out in the future B) constant short-term interest rates in the near future and further out in the future C) constant short-term interest rates in the near future and a decline further out in the future D) a decline in short-term interest rates in the near future and a rise further out in...
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This document was uploaded on 03/20/2014 for the course ECO ECO349 at University of Toronto- Toronto.

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