If the Expected Path of 1-Year Interest Rates Over the Next

question 4

Multiple Choice

If the expected path of 1-year interest rates over the next five years is 2 percent,4 percent,1 percent,4 percent,and 3 percent,the expectations theory predicts that the bond with the lowest interest rate today is the one with a maturity of

• A)one year.
• B)two years.
• C)three years.
• D)four years.

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