The Unbiased Expectations Hypothesis Argues That

Multiple Choice

The Unbiased Expectations Hypothesis argues that:

A) There is a direct positive relationship between the nominal rate of interest on bonds and the expected rate of inflation
B) Expected future short term rates of return should be such that a long term asset held over n periods yields the same return as a short term asset that is held, sold, and reinvested over n periods.
C) Expectations over the value of inflation lowers the return on common stocks and real assets in all possible situations
D) The real rate of return on bonds is determined by the total demand for and the expected supply of money
E) None of the above