Which of the below statements about the pure expectations theory is FALSE.
A) According to the pure expectations theory, the forward rates exclusively represent the expected future rates.
B) The entire term structure at a given time reflects the market's current expectations of the family of future short-term rates.
C) A rising term structure must indicate that the market expects short-term rates to rise throughout the relevant future.
D) A flat term structure reflects an expectation that future short-term rates will always be constant, while a falling term structure must reflect an expectation that future short rates will decline rapidly.
Correct Answer:
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