According to the pure expectations theory of term structure

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Reference no: EM131192548

According to the pure 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.

Reference no: EM131192548

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