According to the Liquidity Premium Theory, the Expected Yield on a Two-Year

question 54

Multiple Choice

According to the liquidity premium theory, the expected yield on a two-year security will ____ the expected yield from consecutive investments in one-year securities.

• A)equal
• B)be less than
• C)be greater than
• D)be less than or greater than, depending on the size of the liquidity premium

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