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Under the expectations hypothesis, bonds of different maturities are assumed to be perfect substitutes because: a. the risk premium is assumed to be negative. b.
Under the expectations hypothesis, bonds of different maturities are assumed to be perfect substitutes because: a. the risk premium is assumed to be negative. b. market forces would always have long-term interest rates equal the average of the current and expected short-term rate. C. expectations of future interest rates are uncertain and therefore cannot be included in the analysis. d. bond markets are very liquid
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