The ________ of the term structure of interest rates states that the i

The ________ of the term structure of interest rates states that the interest rate on a long-term bond will equal the average of short-term interest rates that individuals expect to occur over the life of the long-term bond, and investors have no

preference for short-term bonds relative to long-term bonds. A) segmented markets theory
B) expectations theory
C) liquidity premium theory
D) separable markets theory

ANSWER

B