Which Theory of Term Structure States That Long-Term Rates Are

Multiple Choice

Which theory of term structure states that long-term rates are equal to the geometric average of current and expected short-term rates plus a risk premium that increases with the maturity of the security?

A) The unbiased expectations theory.
B) The liquidity premium theory.
C) The loanable funds theory.
D) The market segmentation theory.
E) None of these.