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Question
YIELD CURVE FOR ZERO COUPON BONDS RATED AA
Assume that there are no liquidity premiums.
According to the unbiased expectations theory,
A. markets are segmented and buyers stay in their own segment
B. liquidity premiums are negative and time varying
C. the term structure will most often be upward sloping
D. the long-term spot rate is an average of the current and expected future short-term interest rates
E. forward rates are less than the expected future spot rates
Answer
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