CFA Practice Question

There are 147 practice questions for this study session.

CFA Practice Question

Which investment strategy would produce a bigger one-month total return according to the local expectations theory?

I. Purchase a 10-year zero-coupon bond.
II. Purchase a 2-year zero-coupon bond.
A. I
B. II
C. The one-month total return would be the same.
Explanation: The theory posits that the expected rate of return on future maturities is actually equal to the short-term risk-free rate (e.g., current Treasury bill yield).

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