Under the Liquidity Premium Theory,a Flat Yield Curve Indicates That

question 35

Multiple Choice

Under the liquidity premium theory,a flat yield curve indicates that investors expect future short-term rates to

• A) fall.
• B) rise.
• C) remain constant.
• D) either fall or remain constant.

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Definitions:

Liability

Legal responsibility for one's actions or for a particular outcome, often involving financial restitution.

Safe Deposit Box

A secure container, usually located within a bank vault, used for the safekeeping of valuables.

Heirs

Individuals or entities designated to receive assets upon another's death under the terms of a will or according to the laws of inheritance.

Pearl Necklace

A piece of jewelry consisting of a strand or strands of pearls.