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What is the Unbiased Expectations Hypothesis of future prices?

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posted Jul 4 by Ananya Saha

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1 Answer

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The Expectations Theory – also known as the Unbiased Expectations Theory – states that long-term interest rates hold a forecast for short-term interest rates in the future. The theory postulates that an investor earns the same amount of interest by investing in a one-year bond in the present and rolling the investment into a different one-year bond after one year as compared to purchasing a two-year bond in the present.

answer Jul 4 by Mukul Chag
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