T/F a. According to Expectation theory, long-term rates are geometric average of current and expected short-term rates. b. The swap curve usès on-the-run prices at plot points. C. When a bond is traded, the seller owes the buyer accrued interest. d. Higher inflation rates lead to higher required interest rates. e. If prices increase, then velocity and/or quantities decrease. f. Quantitative easing adds liquidity when the federal funds rate is negative. g. Bonds may trade in advance of Treasury auction. h. Off the run bonds are the most recently auctioned off for a given initial maturity. i. The yield curve never uses the on-the-run Treasuries. j. If the yield curve in upward sloping, investors expect lower inflation or real rates.

T/F a. According to Expectation theory, long-term rates are geometric average of current and expected short-term rates. b. The swap curve usès on-the-run prices at plot points. C. When a bond is traded, the seller owes the buyer accrued interest. d. Higher inflation rates lead to higher required interest rates. e. If prices increase, then velocity and/or quantities decrease. f. Quantitative easing adds liquidity when the federal funds rate is negative. g. Bonds may trade in advance of Treasury auction. h. Off the run bonds are the most recently auctioned off for a given initial maturity. i. The yield curve never uses the on-the-run Treasuries. j. If the yield curve in upward sloping, investors expect lower inflation or real rates.

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter9: Forecasting Exchange Rates

Section: Chapter Questions

Problem 8QA

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