Why might the above relationship signal a recession

Reference no: EM131139826

Suppose you observe that short-term interest rates are higher than long-term interest rates.

a. What expectations must people have regarding future interest rates?

b. Why might the above relationship signal a recession? Why might it not?

c. What will the yield curve for this problem look like?

Why is the fact that stock prices follow a random walk a signal of stock market efficiency? What would have to be true if stock prices did not follow a random walk?

Reference no: EM131139826

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