According to the unbiased expectations theory,

Multiple Choice

a. the long-term spot rate is an average of the current and expected future short-term interest rates.

b. liquidity premiums are negative and time-varying.

c. forward rates are less than the expected future spot rates.

d. the term structure will most often be upward sloping.

e. markets are segmented and buyers stay in their own segment.

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The answer is a ie the long term s... View the full answer