The expectations theory
A)has difficulty explaining why U.S. Treasury securities have lower yields than corporate bonds.
B)has difficulty explaining why yields on bonds of different maturities move together.
C)has difficulty explaining why yield curves usually slope upward.
D)accounts well for the fact that yield curves usually slope upward.

Question

Quizplus · Accepted Answer

The expectations theory has difficulty explaining why yield curves usually slope upward, which is contrary to the theory's prediction that long-term bonds should have the same yield as a series of shorter-term bonds that, when combined, have the same maturity as the long-term bond.

The Expectations Theory