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Question 5 (10 marks) Consider the expectations theory of the term structure of interest rates. If the yield curve is downwardsloping, this indicates that investors

Question 5 (10 marks) Consider the expectations theory of the term structure of interest rates. If the yield curve is downwardsloping, this indicates that investors expect short-term interest rates to __________ in the future. A) change in an unpredictable manner B) increase C) decrease D) This scenario is not possible because liquidity cannot be negatively valued E) not change

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