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no need explanation. just quick final answer Which of the following is NOT an prediction of the pure expectations theory?
no need explanation. just quick final answer
Which of the following is NOT an prediction of the pure expectations theory?
Select one:
a. Long term rates will adjust in response to market forces in order to bring short and long term rates into equilibrium (at which point your return is the same whether you invest using long term investments or a series of successive short term investments).
b. Long term interest rates are driven by expectations about future short term rates.
c. Long term interest rates will be the geometric average of expected future short term rates.
d. None of the above. (In other words, all of the above ARE predictions of the pure expectations theory.)
