Why Does the Liquidity- Preference Hypothesis Help to Explain the Commonly

question 2

Multiple Choice

Why does the liquidity- preference hypothesis help to explain the commonly occurring upward slope of yield curves?

• A) It assumes that companies will try to equally balance their equity- bond borrowing.
• B) It points out that investors require an extra return for lending long- term.
• C) It assumes that investors will try to equally balance their equity- bond exposure.
• D) It points out that investors require an extra return for lending short- term.

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Definitions:

Cultural Value

The shared beliefs, norms, and practices that are significant within a specific culture, influencing behaviors, attitudes, and perceptions.

Individualism

A social theory favoring freedom of action for individuals over collective control and emphasizing the importance of individual self-reliance and personal independence.

Cultural Value

The shared beliefs or norms that shape the behaviors and practices of individuals within a society or organization.

Children's Development

The physical, cognitive, emotional, and social growth that occurs from infancy through adolescence.