The Expectations Theory of the Term Structure of Interest Rates

question 43

Multiple Choice

The expectations theory of the term structure of interest rates states that

• A)forward rates are determined by investors' expectations of future interest rates.
• B)forward rates exceed the expected future interest rates.
• C)yields on long- and short-maturity bonds are determined by the supply and demand for the securities.
• D)all of the above.
• E)none of the above.

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