According to the Expectations Theory of the Term Structure

question 33

Multiple Choice

According to the expectations theory of the term structure

• A)when the yield curve is steeply upward sloping,short-term interest rates are expected to remain relatively stable in the future.
• B)when the yield curve is downward sloping,short-term interest rates are expected to remain relatively stable in the future.
• C)investors have strong preferences for short-term relative to long-term bonds,explaining why yield curves typically slope upward.
• D)yield curves should be equally likely to slope downward as slope upward.