According to the ________, the forward rates exclusively represent the expected future rates.

Question

Quizplus · Accepted Answer

The pure expectations theory posits that forward rates solely represent the expected future rates. It assumes that investors are solely focused on their expected returns, regardless of the maturity of the bond. This theory suggests that the slope of the yield curve only depends on investors' expectations of future interest rates.

According to the ________, the Forward Rates Exclusively Represent the Expected