The term structure of interest rates states that
◦ terms of the loan have major effects on the interest rate.
◦ the long term interest rate is the geometric mean of the series of short term rates covering the same period.
◦ the long term rate would be higher than the individual short term rates in a rising interest rate environment.
◦ Both the long term interest rate is the geometric mean of the series of short term rates covering the same period and the long term rate would be higher than the individual short term rates in a rising interest rate environment are correct.