(50 points) True or False. There are 6 questions. Each question you answer correctly is worth 9 points to a maximum of 50. (a) Consistent with the expectations hypothesis, we find significant evidence in the data that interest rates usually rise on average when the yield curve is upward sloping. (b) If you buy a five-year zero coupon bond and sell it in one year, your return will outperform the risk-free rate when the future (t = 1) four-year rate (r(4)) is below the current four-year rate (ro(4)). (c) When the yield curve is upward sloping, either people expect interest rates to rise or agents demand a positive risk premium for bearing interest rate risk. (d) When there is uncertainty and we expect that next year the three-year rate will be 5% (i.e. E[r(3)]= 5%), the expectation of the price of the three-year zero coupon bond with face value $100 will be more than $100/1.053 due to convexity (e) Since long term bonds are exposed to interest rate risk, the expected return of holding long term bonds should always be greater than the risk-free rate. (f) If interest rate changes are not predictable, then it must be that bond risk premiums are also not predictable