If the pure expectations theory holds,which of the following statements is CORRECT?
A) The yield curve for both Treasury and corporate bonds should be flat.
B) The yield curve for Treasury securities would be flat,but the yield curve for corporate securities might be downward sloping.
C) The yield curve for Treasury securities cannot be downward sloping.
D) The maturity risk premium would be zero.
E) If 2-year bonds yield more than 1-year bonds,an investor with a 2-year time horizon would almost certainly end up with more money if he or she bought 2-year bonds.

Question

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The Answer of If the pure expectations theory holds,which of the following statements is CORRECT?
A) The yield curve for both Treasury and corporate bonds should be flat.
B) The yield curve for Treasury securities would be flat,but the yield curve for corporate securities might be downward sloping.
C) The yield curve for Treasury securities cannot be downward sloping.
D) The maturity risk premium would be zero.
E) If 2-year bonds yield more than 1-year bonds,an investor with a 2-year time horizon would almost certainly end up with more money if he or she bought 2-year bonds.

If the Pure Expectations Theory Holds,which of the Following Statements