Asked by Moses Amoxx on Apr 29, 2024
Verified
The term structure of interest rates:
A) Compares the real rate of return on coupon bonds for various maturities.
B) Compares the nominal versus the real rates of return over time.
C) Reflects the nominal interest rates on default-free, pure discount bonds.
D) Reflects the difference between the actual time value of money and the rate of return on Canadian Government securities.
E) Is the basic real rate of return which is held constant over time.
Term Structure
Refers to the relationship between interest rates or bond yields and different terms or maturities.
Interest Rates
The proportion of a total amount of money levied for borrowing it, usually represented as an annual rate.
- Analyze the term structure of interest rates and its components.
Verified Answer
CH
Chelsie HannaMay 02, 2024
Final Answer :
C
Explanation :
The term structure of interest rates reflects the nominal interest rates on default-free, pure discount bonds for various maturities, showing how interest rates vary with different lengths of time to maturity.
Learning Objectives
- Analyze the term structure of interest rates and its components.
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