True or False?
False. The evidence shows that either the bond market is in a speculative bubble equilibrium or that Dr. Qwyk's model of the bond market does not correctly predict current Canadian bond prices.
This sort of issue comes up again and again in the study of economics. There are many models which purport to "explain" fundamentals affecting particular markets. Based on these models, inferences are sometimes drawn about whether markets are in long-run equilibrium. Unfortunately, even the cleverest modeler cannot conclude with confidence that he/she has captured the truth. All inferences based on such models jointly involve two hypotheses---1) that the model of the fundamentals is correct, and 2) that there is a short-run equilibrium that departs from the fundamentals. One can never know whether the inconsistency of the model's prediction with what is observed due to invalidity of the first hypothesis or invalidity of the second.
If the truth about the fundamentals could be correctly modelled, investors' would use this knowledge. The information the model provides about the fundamentals would then be reflected in the observed asset price and the model would henceforth tell us nothing that we do not already observe. There are no known cases of models that have achieved this illustrious fate.