ECO349H5 Study Guide - Final Guide: University Of Toronto Mississauga, Yield Curve, Efficient-Market Hypothesis
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If any of these items are in your possession, please turn them off and put them with your belongings at the front of the room before the examination begins and no penalty will be imposed. A penalty may be imposed if any of these items are kept with you during the writing of your exam. Please note, students are not allowed to petition to re-write a final examination. 7 (a) (b) (a) (b) (c) (a) (b) (c) (a) (b) Eco349h5f page 1 of 14 (excluding cover page) What is the key assumption of the expectations theory and its implication on (4 marks) expected return on bonds with different maturities? (13 marks) 1(b). Follow the same notations used in class, derive the relationship between the. ) and the long-term interest expected future short-term interest rates ( , rate ( ) under the expectations theory. continued on page 2 (cont"d)
