According to the Expectations Theory of the Term Structure of Interest

question 22

Multiple Choice

According to the expectations theory of the term structure of interest rates,

• A) investors prefer holding short-term securities.
• B) the shape of the yield curve is determined by investors' expectations of future short-term interest rates.
• C) institutional investors' maturity preferences determine the shape of the yield curve.
• D) investors always expect short-term interest rates to increase.
• E) both a and b

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