CENGAGE MINDTAP

Ch 06- Assignment - Interest Rates

Attempts

6. Pure expectations theory

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The pure expectations theory, or the expectations hypothesis, asserts that long-term interest rates can be used to estimate future short-term interest

rates.

Based on the pure expectations theory, is the following statement true or false?

The pure expectations theory assumes that a one-year bond purchased today will have the same return as a one-year bond purchased

five years from now.

O False

O True