Under the expectations theory if market participants expect that future short-term rates will be higher than current short-term rates, the yield curve will
A)slope upward.
B)slope downward.
C)be flat.
D)slope upward, slope downward, or be flat, depending on risk, liquidity, cost of information, and tax considerations.

Question

Quizplus · Accepted Answer

According to the expectations theory, an upward slope indicates that investors expect future short-term rates to be higher than current short-term rates.

Under the Expectations Theory If Market Participants Expect That Future