The Unbiased Expectations Theory of the Term Structure of Interest

question 112

Multiple Choice

The unbiased expectations theory of the term structure of interest rates

• A)assumes that long-term interest rates are an arithmetic average of short-term rates.
• B)assumes that the yield curve reflects the market's current expectations of future short-term interest rates.
• C)recognizes that forward rates are perfect predictors of future interest rates.
• D)assumes that risk premiums increase uniformly with maturity.
• E)None of the options.

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