In 2016, when the interest rate on 10-year German government bonds became negative, an article in the Wall Street Journal noted that the interest rate on 10-year bonds depended in part on investors' expectations of future short-term interest rates. The article also noted that

open double quoteinvestors

don't seem to have changed their perception of ... [short-term] interest rates in the future

....close double quote

Source: Jon Sindreu,

open double quoteAre

German Bonds Riding a

Bubble?close double quote

Wall Street

Journal,

June 14, 2016.

Which of the following theories best explains the scenario described?

A.

The Inverted Outlook Theory.

B.

The Liquidity Premium Theory.

C.

The Segmented Markets Theory.

D.

The Expectations Theory.