The Expectations Theory Implies That the Only Reason for a Declining

question 52

True/False

The expectations theory implies that the only reason for a declining term structure is that investors expect spot interest rates to fall.

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Definitions:

Holder

A person who is in possession of a negotiable instrument that is issued or indorsed to that person’s order or to bearer.

Negotiable Instrument

A written document that is signed by the maker or drawer and that contains an unconditional promise or order to pay a certain sum of money on delivery or at a definite time to the bearer or to order.

Holder in Due Course

A legal term describing a party who has acquired a negotiable instrument in good faith and for value, thereby having certain protections against defenses and claims.