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1. What are the assumptions behind the Pure (Unbiased) Expectations Theory and to what conclusion do...

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Accounting

1. What are the assumptions behind the Pure (Unbiased)Expectations Theory and to what conclusion do those assumptionslead?

2. What is the difference (in words, not numbers) between theFederal Funds market and the market for Discount Window loans?

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Ans1Assumptions of the Unbiased Expectation theory The pure expectations theory rests upon important assumptions about investors and markets Investors are indifferent between owning a single longterm security or a series of shortterm securities over the same period Thus maturity alone does not affect investors choice of investments All investors hold common expectations about the course of shortterm rates On average investors are able to predict    See Answer
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