Assuming the Pure Expectations Theory Is Correct,which of the Following

question 49

Multiple Choice

Assuming the pure expectations theory is correct,which of the following statements is CORRECT?

• A) If 2-year Treasury bond rates exceed 1-year rates,then the market must expect interest rates to rise.
• B) If both 2-year and 3-year Treasury rates are 7%,then 5-year rates must also be 7%.
• C) If 1-year rates are 6% and 2-year rates are 7%,then the market expects 1-year rates to be 6.5% in one year.
• D) Reinvestment rate risk is higher on long-term bonds,and interest rate (price)risk is higher on short-term bonds.
• E) Interest rate (price)risk and reinvestment rate risk are relevant to investors in corporate bonds,but these concepts do not apply to Treasury bonds.

---

Definitions:

Biographies

Written accounts of individuals' lives, detailing their experiences, challenges, and achievements.

Higher Self-esteem

A positive evaluation of oneself, reflecting a person's belief in their own worth, abilities, and value.

Procrastination

The action of delaying or postponing tasks, often due to lack of motivation, fear of failure, or poor time management.

International Standards

Agreed-upon norms and criteria developed by global organizations to ensure quality, safety, and efficiency.