Answer:
c. The maturity risk premium is zero.
Explanation:
Pure expectation theory states that the forward rate will represent expected future rate. Term structure is said to be a reflection of what the market expects future short term rates to be.
As future rates are expected to be the same as spot rates for that date, the theory is only applicable when there is no risk premium. That is the maturity risk premium is zero.
BOTH. They have to at least tell you what the test is on.
During the 1950s, as a result of war and conquering, the status of most countries in Eastern Europe is that they became satellite countries of the Soviet Union at that time. Most countries that neighbor the Soviet Union were heavily influenced by it in terms of politics, military and economy.
