Question #55
Reading: Reading 25 The Term Structure and Interest Rate Dynamics
PDF File: Reading 25 The Term Structure and Interest Rate Dynamics.pdf
Page: 22
Status: Unattempted
Correct Answer: A
Question
Which of the following statements are most accurate?
Answer Choices:
A. Short-term rates are typically more volatile than long-term rates
B. Volatility of short-term and long-term rates is typically equal
C. Long-term rates are typically more volatile than short-term rates
Explanation
Volatility of rates is inversely related to maturity: long-term rates are less volatile than
short-term rates.