Question

Which of the following statements about term structure is(are) most correct?

A. Term structure is the relationship between interest rates and discount rates.

B. Term structure can be expressed either in tabular form or in graphical form.

C. A term structure graph is called a valuation graph.

D. The yield curve can have a variety of shapes, but the most common is downward sloping.

E. All of the above statements are correct.

Answer #1

Correct answer is option **(B). Term structure can be
expressed either in tabular form or in graphical form.**

Explanation;

The term structure shows the relationship between interest rates or bond yields and different terms or maturities. Thus option (A) is incorrect.

The term structure of interest rates is also known as a yield curve, and it is not called a valuation graph thus option (C) is not correct.

The yield curve can have a variety of shapes, but the most common is upward sloping hence option (D) is also incorrect.

So on the basis of above explanation it is clear that only option (B) is most correct answer because term structure can be expressed either in tabular form or in graphical form.

We studied several different theories of the yield curve. Which
of the following statements is most likely correct?
a. The liquidity premium version of the expectations theory
cannot explain a flat term structure of interest rates
b. The pure expectations theory suggests that an upward-sloping
term structure of interest rates is a consequence of investors
expecting short-term rates to remain unchanged for a period of
time, followed by investors expecting short-term rates to rise for
a period of time
c....

If the pure expectations theory of the term structure is
correct, which of the following statements is CORRECT?
A. An upward sloping yield curve would imply that interest rates
are expected to be lower in the future.
B. If a 1-year Treasury bill has a yield to maturity of 7% and a
2-year Treasury bill has a yield to maturity of 8%, this would
imply the market believes that 1-year rates will be 7.5% one year
from now.
C. The...

Which of the following statements about a bond is true?
Group of answer choices
A. If the yield curve is downward sloping, long-term yields are
lower than short-term yields because market interest rates are
expected to decrease.
B. If the yield curve is downward sloping, long-term yields are
lower than short-term yields because market interest rates are
expected to increase
C.The value of a bond cannot be traded in the market at its face
value
D. All else being equal,...

The term structure of interest rates defines the ____ and tends
to be _____ during periods of economic growth.
A) relationship between the term to maturity and the annualized
yield of debt; upward sloping
B) relationship between the term to maturity and the annualized
yield of debt; downward sloping
C) credit terms included in the bond indenture; more
lenient
D) credit terms included in the bond indenture; more
restrictive
Which of the following debt instruments pay interest?
A) Treasury bills...

Which of the following statements is CORRECT?
Select one:
The market capitalization of a corporation is the total market
value of its stocks and bonds.
When the yield curve is strictly downward sloping, the term
spread must be negative.
If the stock becomes riskier, its price increases.
Legal tender is the provision that shields owners of a
corporation from losing more than what they have invested in the
firm.

Can an inverted (i.e., downward sloping) yield curve occur with
the three
theories of the term structure of interest rates? (Pure
expectations theory,
liquidity preference theory, and market segmentation theory.)
a. Yes.
b. All except pure expectations.
c. All except liquidity preference.
d. None of the above

Suppose that we observe the following spot rates, i.e. the yield
curve is downward sloping. The spot rates are annual rates that are
semi-annually compounded.
Time to Maturity
Spot Rate
0.5
3.00%
1.0
3.00%
1.5
3.00%
2.0
3.00%
1. Compute the six-month forward curve, i.e. compute
f(0,0.5,1.0), f(0,1.0,1.5), f(0,1.5,2.0).
2. What can we say about the forward curve?
When the term structure of interest rates is flat sloping, the
forward curve is _____________ (upward/downward/flat) sloping.

Which of the following statements about a scattergraph is
correct?
Multiple Choice
it is the most accurate way of estimating the variable and fixed
elements of a fixed cost
it is an effective way of determining if the cost behaviour is
linear
it will always yield the same results as the high-low method
provides only one correct cost formula in the form of Y=a+bx

Proficient-level: Define the concept, term structure of interest
rates. List and describe the three theories explaining the shape of
the term structure of interest rates. Distinguished-level: Identify
the slope of the most common yield curve for a U.S. Treasury
security.

Which of the following statements is CORRECT?
a. Inverted yield curves can exist for Treasury bonds, but
because of default premiums, the corporate yield curve cannot
become inverted.
b. If the yield curve is inverted, short-term bonds have lower
yields than long-term bonds.
c. The most likely explanation for an inverted yield curve is
that investors expect inflation to increate in the future.
d. The higher the maturity risk premium, the higher the
probability that the yield curve will be...

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