Cuba is one of the countries that is currently adopting a mixed type of economy. By definition, a mixed economy takes place when the concepts of a market economy and a command economy are combined in a single system. For Cuba, there are some elements that their government are implementing economic policies however not risking the integrity of the free market.
Answer:
c. The maturity risk premium is zero.
Explanation:
Pure expectation theory states that the forward rate will represent expected future rate. Term structure is said to be a reflection of what the market expects future short term rates to be.
As future rates are expected to be the same as spot rates for that date, the theory is only applicable when there is no risk premium. That is the maturity risk premium is zero.
The answer is b. social clock
Social clock refer to the social expectations that are
given by a culture about when the transitional events like marriage, having
kids, or retirement should take place in life. The social clock for every
culture and country differs, as the norms and values of every society have been
shaped over several centuries.
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