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Assume the expectations theory of the term structure of interest rates is completely correct. Also assume that the yield curve is perfectly flat. Then lenders

Assume the expectations theory of the term structure of interest rates is completely correct. Also assume that the yield curve is perfectly flat. Then lenders must expect that

a) short term interest rates wont change in the future

b) short term interest rates will rise in the future

c) short term interest rates will fall in the future

d) you cant infer anything about what lenders are expecting

e) none of the above

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