Multiple Choice
Assume the Expectation Hypothesis regarding the term structure of interest rates is correct. Then, if the current one-year interest rate is 4% and the two-year interest rate is 6%, then investors are expecting the future one-year rate to be:
A) 4%.
B) 8%.
C) 6%.
D) 5%.
Correct Answer:
Verified
Correct Answer:
Verified
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