Multiple Choice
Suppose the yield curve is initially horizontal.Suppose the current one-year interest rate increases by 4% while the expected future one-year interest rate does not change.Which of the following will tend to occur?
A) i₂t will increase by 4%
B) i₂t will increase by 2%
C) i₂t will increase by less than 2%
D) i₂t will decrease by 2%
Correct Answer:
Verified
Correct Answer:
Verified
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