Which of the following statement about the yield curve is false? O According to expectations theory, yield curve is normal when interest rate and inflation rate are expected to increase in future and vice versa. O The market-segmentation theory supports the notion that separate demand and supply determinants exists for short-term and long-term securities and their interplay in distinct markets determine the shape of the yield curve. The shape of the yield curve to some extent can provide clues as to the direction of future interest rates. O Liquidity preference theory explains the normal yield curve, inverted and flat yield curves.
Which of the following statement about the yield curve is false? O According to expectations theory, yield curve is normal when interest rate and inflation rate are expected to increase in future and vice versa. O The market-segmentation theory supports the notion that separate demand and supply determinants exists for short-term and long-term securities and their interplay in distinct markets determine the shape of the yield curve. The shape of the yield curve to some extent can provide clues as to the direction of future interest rates. O Liquidity preference theory explains the normal yield curve, inverted and flat yield curves.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Which of the following statement about the yield curve is false?
According to expectations theory, yield curve is normal when interest rate and inflation rate are expected to
increase in future and vice versa.
The market-segmentation theory supports the notion that separate demand and supply determinants exists
for short-term and long-term securities and their interplay in distinct markets determine the shape of the
yield curve.
The shape of the yield curve to some extent can provide clues as to the direction of future interest rates.
Liquidity preference theory explains the normal yield curve, inverted and flat yield curves.
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