If the expectations theory of interest rates is accurate, the only explanation for an upward sloping yield curve is
A) fear of inflation
B) an expectation that interest rates will continually increase
C) demand for liquidity
D) risk aversion

Question

Quizplus · Accepted Answer

The expectations theory suggests that an upward sloping yield curve indicates that investors expect future interest rates to rise.

If the Expectations Theory of Interest Rates Is Accurate, the Only