Assume the market segmentation theory is true. If investors believe that inflation will be higher in the future than it is now, then the term structure of interest rates will be:
A) upward sloping.
B) flat.
C) downward sloping.
D) humped.
E) Any of the above.

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The Answer of Assume the market segmentation theory is true. If investors believe that inflation will be higher in the future than it is now, then the term structure of interest rates will be:
A) upward sloping.
B) flat.
C) downward sloping.
D) humped.
E) Any of the above.

Assume the Market Segmentation Theory Is True