An investor with a six year investment horizon believes that interest rates are determined only by expectations about future interest rates. ...
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16. An investor with a six year investment horizon believes that interest rates are determined only by expectations about future interest rates. This investor should expect to earn the same rate of return over the 6 year time horizon if the investor buy a 6 year or a 3 year bond now and another 3 year bond three years from now. (ignore transaction costs.)
True/False?
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True.
Expectations theory says long term rates are a geometric average of ...
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