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Suppose Financial Market Participants Expect Short-Term Rates in the Future

Question 3

Multiple Choice

Suppose financial market participants expect short-term rates in the future to be less than current short-term interest rates.Given this information,we would expect


A) an upward sloping yield curve.
B) a downward sloping yield curve.
C) an upward shifting yield curve.
D) a downward shifting yield curve.
E) a horizontal yield curve.

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