Which of the Following Is NOT True of the Expectations

question 24

Multiple Choice

Which of the following is NOT true of the expectations theory?

• A)It assumes that instruments with different maturities are perfect substitutes.
• B)It implies that a long-term bond rate equals the average of short-term rates covering the same investment period.
• C)It implies that the yield curve will usually slope upward.
• D)It implies that the shape of the yield curve depends on the expected pattern of future short-term rates.

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