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Basic Question 6 of 10
The unbiased expectations theory:
B. predicts a flat yield curve.
C. does not make such predictions.
A. predicts an upward-sloping yield curve.
B. predicts a flat yield curve.
C. does not make such predictions.
User Contributed Comments 2
| User | Comment |
|---|---|
| charliedba | The future spot rate is greater than current rates due to expectations of inflation. However if deflation is expected, the term structure and yield curve are downward sloping. |
| dancer | The expected return for every bond over short time period is the risk-free rate. Risk premiums do exist on long-term bond investments. |
Your review questions and global ranking system were so helpful.
Lina
Learning Outcome Statements
explain traditional theories of the term structure of interest rates and describe the implications of each theory for forward rates and the shape of the yield curve;
CFA® 2025 Level II Curriculum, Volume 4, Module 26.