According to the Expectations Hypothesis, If Investors Believed That, for a Given

Multiple Choice

According to the Expectations Hypothesis, if investors believed that, for a given holding period, the average of the expected future short-term yields was greater than the long-term yield for the holding period, they would act so as to:

A) Drive down the price of the short-term bond and drive up the price of the long-term bond
B) Drive up the price of the short-term bond and drive down the price of the long-term bond
C) Drive up the prices of both the short- and long-term bonds
D) Drive down the prices of both the short- and long-term bonds