According to the expectations theory of the term structure
A) when the yield curve is steeply upward sloping, short-term inerest rates are expected to remain relatively stable in the future.
B) when the yield curve is downward sloping, short-term interest rates are expected to remain relatively stable in the future.
C) investors have strong preferences for short-term relative to long-term bonds, explaining why yield curves typically slope upward.
D) yield curves should be equally likely to slope downward as slope upward.
Answer: D
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