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Structure of interest rates

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If the forward interest rate decreases while neither current short-term nor expected future short-term zero rates change, which of the following theories of the term structure of interest rates must be violated?

  1. Expectation theory
  2. Market segmentation theory
  3. Liquidity preference theory
  4. Both (2) and 3)
  5. None of the above

Reference no: EM133113028

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