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According to the Pure Expectations Theory, a Flat Yield Curve

Question 20

Multiple Choice

According to the pure expectations theory, a flat yield curve means the market


A) thinks that future interest rates will be higher than current interest rates.
B) thinks that future interest rates will be lower than current interest rates.
C) does not know what will happen to future interest rates.
D) thinks that future interest rates will be exactly the same as current interest rates.

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