According to the Expectations Theory, If Investors Believed That, for a Holding

question 89

Multiple Choice

According to the expectations theory, if investors believed that, for a holding period the average of the expected future short-term yields was greater than the long-term yield, they would act so as to

• A)drive up the price of the short-term security and drive down the price of the long-term security.
• B)drive down the price of the short-term security and drive up the price of the long-term security.
• C)drive down the prices of the short-term and long-term securities.
• D)drive up the prices of the short-term and long-term securities.

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