According to the Expectations Theory, the forward rates are unbiased predictors for making expectations of future spot rates. We can therefore forecast future interest rates by looking at the term structure of interest rates since the return on a long-term bond is, in essence, the average return on short-term bonds over the same period. If the short-term rates decrease, the average will be less than the current rate, and the term structure of interest rates will be downward sloping.

Option A is incorrect. The liquidity preference theory suggests that the investors are likely to invest their funds for a shorter period while borrowers are more willing to borrow the funds at long-term fixed rates. The theory also concludes that the forward rates are greater than the future spot rates, which justifies the empirical result that the yield curve tends to be upward sloping.

Option B is incorrect. The market segmentation theory suggests that there is no relationship between short-term, medium-term, and long-term interest rates. These interest rates are independently determined by the supply and demand in their specific bond market. For instance, the short-term interest rate is determined by the supply and demand for short-term bonds.