Question

Why is it unlikely that the expectations theory alone is the correct theory for explaining the yield curve?

Answer 1

In some instants,  expectations theory is indeed utilized as an explanation for explaining the yield curve. However, this might notbe true in all the instants and this is because the theory has been shown to be inaccurate in execution, because interest rates typically stay flat where the yield curve is usually normal. At such instants, the expectations theory is known to over-estimate future short-term interest rates where the expectations theory fail to explain the yield curve on the whole.