Unbiased expectation theory

In CFA material it is mentioned Unbiased expectation theory is consistent with risk neutrality, can someone explain how? Example will be useful.

That means for all tenors, the risk premium = 0 (i.e. you earn the risk-free rate for all maturities that you invest).

So whether you invest/borrow for 1 year, 2 years, 5 years, or 10 years, the spot rate is just the risk-free rate. The theory ignores the fact that longer maturity investments are riskier (i.e. should incorporate a maturity/liquidity premium), which then leads to the local expectations theory (only short-term maturities have no risk premiums).


Thanks for clearing the doubt.

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