Question

the term structure of interest rates is a. the relationship among interest rates of different bonds with the same maturity. b. the structure of how interest rates move over time. c. the relationship among the term to maturity of different bonds. d. the relationship among interest rates on bonds with different maturities.

Answer 1

The term structure of interest rates is the relationship between interest rates or bond yields and different terms or maturities.

What is Term Structure of Interest Rates?

The yield curve, also known as the term structure of interest rates, represents the interest rates of bonds of comparable quality but different maturities. The interest rate term structure shows market participants' expectations for future interest rate adjustments as well as their evaluation of the state of monetary policy.

The relationship between interest rates or bond yields and various terms or maturities is, in essence, the term structure of interest rates. The term structure of interest rates is referred to as a yield curve when it is graphed, and it is extremely important in determining the state of an economy at any one time.

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