QUESTIONS 97 THROUGH 108 RELATE TO FIXED INCOME INVESTMENTS.

98. A bond market analyst states, “The current term structure of interest rates is upward sloping

which implies the market believes short-term interest rates will rise in the future.” Which theory

of the term structure of interest rates does the analyst most likely believe?

A. Pure expectations theory.

B. Liquidity preference theory.

C. Market segmentation theory.