According to the expectations theory of the term structure,
A) when the yield curve is steeply upward-sloping, short-term interest rates are expected to rise 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) all of the above.
E) only A and B of the above.
Answer: A) when the yield curve is steeply upward-sloping, short-term interest rates are expected to rise in the future.