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The Expectations Theory of the Term Structure of Interest Rates

Question 4

Multiple Choice

The expectations theory of the term structure of interest rates states that


A) forward rates are determined by investors' expectations of future interest rates.
B) forward rates exceed the expected future interest rates.
C) yields on long- and short-maturity bonds are determined by the supply and demand for the securities.
D) All of the options
E) None of the options

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