Knowledge that Transforms

The first half of Richard Roll's comment contains an argument that my interpretation of the traditional expectations hypothesis of the term structure of interest rates is incorrect. The second half argues that both the decision rule that I infer from the traditional theory and the decision rule that I have advanced as an improvement upon that approach are sub-optimal. Adolf Buse and Reuben A. Kessel, on the other hand, accept my interpretation of the received theory and argue that the traditional approach is correct. I will respond first to Roll's criticism of my interpretation (and that of Buse and Kessel) of the traditional literature.