What Does an Upward-Sloping Yield Curve Imply, According to the Expectations

question 23

Multiple Choice

What does an upward-sloping yield curve imply, according to the expectations theory of the term structure of interest rates?

• A)Investors expect long-term interest rates to fall in the future.
• B)Investors expect future short-term interest rates to be lower than the current short-term interest rate.
• C)Investors expect future short-term interest rates to be the same as the current short-term interest rate.
• D)Investors expect future short-term interest rates to be higher than the current short-term interest rate.

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