3. Pure expectations theory: Two-year bonds Which of the following is consistent with the pure expectations theory of the yield curve? Check all that apply. A downward-sloping yield curve suggests that the market thinks interest rates in the future will be lower than they are today. A flat yield curve suggests that the market thinks interest rates in the future will be higher than they are today. A flat yield curve suggests that the market thinks interest rates in the future will be the same as they are today. A downward-sloping yield curve suggests that the market thinks interest rates in the future will be higher than they are today. Juanita would like to invest a certain amount of money for two years and considers investing in a one-year bond that pays 3 percent and a two-year bond that pays 7 percent. Juanita is considering the following investment strategies: Strategy A: In the first year, buy a one-year bond that pays 3 percent. Once that bond matures, buy another one-year bond that pays the forward rate. Strategy B: In the first year, buy a two-year bond that pays 7 percent annually. If the one-year bond purchased in year two pays 7 percent, Juanita will choose Which of the following describes conditions under which Juanita would be indifferent between Strategy A and Strategy B? The rate on the one-year bond purchased in year two pays 10.485 percent. The rate on the one-year bond purchased in year two pays 11.155 percent. The rate on the one-year bond purchased in year two pays 12.047 percent. The rate on the one-year bond purchased in year two pays 9.482 percent