According to the expectations theory of the term structure,

A when the yield curve is steeply upward-sloping, short-term interest rates are expected to rise in the future.

B when the yield curve is downward-sloping, short-term interest rates are expected to remain relatively stable in the future.

C investors have strong preferences for short-term relative to long-term bonds, explaining why yield curves typically slope upward.

D all of the above.

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Divya SinghLv10

28 Sep 2019

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