According to the expectations theory of the term structure, Group of answer choices A) when the yield curve is downward-sloping, short-term interest rates are expected to remain relatively stable in the future. B) investors have strong preferences for short-term relative to long-term bonds, explaining why yield curves typically slope upward. C) when the yield curve is steeply upward-sloping, short-term interest rates are expected to rise in the future. D) all of the above. E) only A and B of the above.
According to the expectations theory of the term structure, Group of answer choices A) when the yield curve is downward-sloping, short-term interest rates are expected to remain relatively stable in the future. B) investors have strong preferences for short-term relative to long-term bonds, explaining why yield curves typically slope upward. C) when the yield curve is steeply upward-sloping, short-term interest rates are expected to rise in the future. D) all of the above. E) only A and B of the above.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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According to the expectations theory of the term structure,
Group of answer choices
A) when the yield curve is downward-sloping, short-term interest rates are expected to remain relatively stable in the future.
B) investors have strong preferences for short-term relative to long-term bonds, explaining why yield curves typically slope upward.
C) when the yield curve is steeply upward-sloping, short-term interest rates are expected to rise in the future.
D) all of the above.
E) only A and B of the above.
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