According to the Expectations Theory,which of the Following Is False

question 29

Multiple Choice

According to the expectations theory,which of the following is false?

• A) It assumes that instruments with different maturities are perfect substitutes.
• B) It implies that a long-term bond rate equals the average of short-term rates covering the same investment period.
• C) It implies that the yield curve will usually slope upward.
• D) It implies that the shape of the yield curve depends on the expected pattern of future short-term rates.

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