According to expectations theory, an investor who believes that interest rates are likely to decrease in the near future would
A) invest in short-term securities immediately.
B) invest in long-term securities immediately.
C) sell long-term securities from her portfolio.
D) sell corporate securities and invest in Treasury securities.

Question

Quizplus · Accepted Answer

According to expectations theory, if an investor expects interest rates to decrease, they would invest in long-term securities to lock in the current higher rates before they fall.

According to Expectations Theory, an Investor Who Believes That Interest