Answer the below questions. (a) What is the common hypothesis about the behavior of short-term forward rates
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(a) What is the common hypothesis about the behavior of short-term forward rates shared by the various forms of the expectations theory?
(b) What is price risk and reinvestment risk and how do these two risks affect the pure expectations theory?
(c) Give three interpretations of the pure expectations theory.
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a There are several forms of the expectations theory pure expectations theory liquidity theory and preferred habitat theory Expectations theories share a hypothesis about the behavior of shortterm for...View the full answer
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