Exam 6: The Structure of Interest Rates

Which of the following is not considered a major credit-rating agency?

The premium rewarded to purchasers for accepting more risk is referred to as which of the following?

__________ suggests that the long-term interest rate is the geometric average of the present short-term rate and the short-term rates expected to prevail over the term to maturity of the long-term security.

Typically, the yields on municipal securities are

__________ postulates that many borrowers and lenders favor securities that have maturities of a particular length. This favoritism creates a degree of market segmentation between the short-term and long-term securities markets.

Which security has the least credit risk?

The current long-term interest rate is a function of all of the following except

Which of these is a major corporate credit-rating agency that evaluates a borrower's probability of default and assigns the borrower to a particular risk class?

The expected short-term interest rate is inversely related to expectations about future

Treasury bills (T-bills) carry maturities of

-Refer to Figures A, B, and C. According to expectations theory, which of the figures reflects expectations that the short-term interest rate is expected to remain constant in the future?

The hypothesis that the markets for short- and long-term securities are completely separate markets is called the

Which of these is a major corporate credit-rating agency that evaluates a borrower's probability of default and assigns the borrower to a particular risk class?

The __________ is the extra return or interest with which a lender is compensated for accepting more risk.

The pattern or spread among interest rates is usually referred to as the

What happens to the shape of the yield curve if, ceteris paribus, expectations about future interest rates change such that future short term interest rates are expected to be higher than previously expected?

When the yield curve is downward sloping or inverted, this means

Typically, an individual asset is depicted on

Ratings and classifications of borrowers are determined by the borrowers'

The tax rate paid on the last dollar of income that the taxpayer earns is the