Question

If you believe in the expectations hypothesis, what is your best guess as to the expected value of the short-term interest rate next year?

Answer 1

The expected value of the short-term interest rate next year will be 0.01%.

The amount of interest due each period expressed as a percentage of the amount lent, deposited, or borrowed is known as an interest rate. The total interest on a loaned or borrowed sum is determined by the principal amount, the interest rate, the frequency of compounding, and the period of time the loan, deposit, or borrowing took place.

Average daily rates expressed as a percentage are typically what short-term interest rates are. Where applicable, three-month money market rates serve as the foundation for short-term interest rates. typical uniformed

According to empirical data, banks loosen their lending requirements and award new loans with higher credit risks when short-term interest rates are low, but they also reduce the corresponding loan spreads. 2 This implies that banks' appetite for risk is increased by low-interest rates.

To know more about short-term interest rates refer to:  brainly.com/question/13060914

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