Understanding the Expectation Hypothesis in the Term Structure of Interest Rates

The term structure of interest rates plays a crucial role in the fixed income market by influencing investment decisions and pricing of bonds.

In this context, it is important to understand how different theories explain the shape of the yield curve. The expectation hypothesis, for instance, suggests that the yield curve's shape is determined by investor expectations of future interest rates.

Given this background, which of the following theories of interest rate determination states that long-term rates reflect the average of expected future short-term rates?