If the Pure Expectations Theory Holds,which of the Following Statements

question 47

Multiple Choice

If the pure expectations theory holds,which of the following statements is CORRECT?

• A) The yield curve for both Treasury and corporate bonds should be flat.
• B) The yield curve for Treasury securities would be flat,but the yield curve for corporate securities might be downward sloping.
• C) The yield curve for Treasury securities cannot be downward sloping.
• D) The maturity risk premium would be zero.
• E) If 2-year bonds yield more than 1-year bonds,an investor with a 2-year time horizon would almost certainly end up with more money if he or she bought 2-year bonds.

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Definitions:

Psychoactive Drug

Any substance that affects the mind, altering mood, perception, or consciousness, including medications and recreational drugs.

Susceptibility

The degree to which a person or organism can be affected by a particular agent or condition.

EEG Recordings

Electrical recordings of brain activity obtained through electrodes placed on the scalp, used in neuroscience research.

Alpha Waves

Brain wave patterns associated with relaxed and calm states of mind, typically present when a person is awake but relaxed.