Which of the following is consistent with the pure expectations theory of the yield curve? Check all that apply.

An upward$-$sloping yield curve suggests that the market thinks interest rates are going to be lower in the future than they are today.

A flat yield curve suggests that the market thinks interest rates in the future will be lower than they are today.

A flat yield curve suggests that the market thinks interest rates in the future will be the same as they are today.

A downward$-$sloping yield curve suggests that the market thinks interest rates in the future will be lower than they are today.

Becky would like to invest a certain amount of money for two years and considers investing in a one$-$year bond that pays $5$ percent and a two$-$year bond that pays $7$ percent. Becky is considering the following investment strategies:

Strategy A: In the first year, buy a one$-$year bond that pays $5$ percent. Once that bond matures, buy another one$-$year bond that pays the forward rate.

Strategy B: In the first year, buy a two$-$year bond that pays $7$ percent annually.

If the one$-$year bond purchased in year two pays $11$ percent, Becky will choose Strategy Agrad.

Which of the following describes conditions under which Becky would be indifferent between Strategy A and Strategy B$?$

The rate on the one$-$year bond purchased in year two pays $8\mathrm{.}496$ percent.

The rate on the one$-$year bond purchased in year two pays $9\mathrm{.}038$ percent.

The rate on the one$-$year bond purchased in year two pays $9\mathrm{.}400$ percent.

The rate on the one$-$year bond purchased in year two pays $9\mathrm{.}761$ percent.

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