According to the Unbiased Expectations Theory

question 40

Multiple Choice

According to the unbiased expectations theory,

• A)the term structure will most often be upward sloping.
• B)liquidity premiums are negative and time varying.
• C)the long-term spot rate is an average of the current and expected future short-term interest rates.
• D)markets are segmented and buyers stay in their own segment.
• E)forward rates are less than the expected future spot rates.

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Definitions:

Imperative

Describes something that is absolutely necessary or required, often used in the context of commands or duties.

Integration Imperative

The perceived need or policy goal of integrating diverse groups into a cohesive and functioning society, emphasizing unity and cooperation.

Social System

Refers to a complex set of human relationships interacting in many ways and at multiple levels, including institutions, organizations, and individuals.

Action System

An organizational concept in sociology and systems theory used to describe and analyze social behaviors and structures.