Which Fact About the Term Structure Is the Expectations Theory

question 107

Multiple Choice

Which fact about the term structure is the Expectations Theory able to explain?

• A) Why interest rates on bonds with different terms to maturity tend to move together over time
• B) Why yields on short-term bonds are more volatile than yields on long-term bonds
• C) Why longer-term yields tend to be higher than shorter-term yields
• D) Why interest rates on bonds with different terms to maturity tend to move together over time and why yields on short-term bonds are more volatile than yields on long-term bonds

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