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6. Pure expectations theory Aa Aa The pure expectations theory, or the expectations hypothesis, asserts that long-term interest rates can be used to estimate future
6. Pure expectations theory Aa Aa The pure expectations theory, or the expectations hypothesis, asserts that long-term interest rates can be used to estimate future short-term interest rates. Based on the pure expectations theory, is the following statement true or false? The pure expectations theory assumes that investors do not consider long-term bonds to be riskier than short-term bonds. O True Q False The yield on a one-year Treasury security is 4.6900%, and the two-year Treasury security has a 6.3300% yield Assuming that the pure expectations theory is correct, what is the market's estimate of the one-year Treasury rate one year from now? O 9.120090 O 8.0000% 0 10.160096 O 6.800096
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