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Which of the following statements is incorrect? A. If investors expect a zero rate of inflation, then the nominal rate of return on a very

Which of the following statements is incorrect?

A. If investors expect a zero rate of inflation, then the nominal rate of return on a very short-term U.S. Treasury bond should be equal to the real risk-free rate.
B. If the pure expectations theory is correct, a downward sloping yield curve indicates that interest rates are expected to decline in the future.
C. "Risk aversion" implies that investors require higher expected returns on riskier versus less risky securities.
D. A stock with above-average market risk will tend to be more volatile than an average stock, and its beta will be greater than 1.0.
E. All of the statements above are correct.

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