The Expectations Theory of the Term Structure of Interest Rates

question 15

Multiple Choice

The expectations theory of the term structure of interest rates states that

• A) forward rates are determined by investors' expectations of future interest rates.
• B) forward rates exceed the expected future interest rates.
• C) yields on long- and short-maturity bonds are determined by the supply and demand for the securities.
• D) All of the options are correct.
• E) None of the options are correct.

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