According to the Liquidity Premium Theory of the Term Structure

question 23

Multiple Choice

According to the liquidity premium theory of the term structure

• A)bonds of different maturities are not substitutes.
• B)if yield curves are downward sloping,then short-term interest rates are expected to fall by so much that,even when the positive term premium is added,long-term rates fall below short-term rates.
• C)yield curves should never slope downward.
• D)interest rates on bonds of different maturities do not move together over time.

---

Definitions:

Roller Skates

Shoes, or a binding worn over shoes, fitted with a set of wheels for gliding and maneuvering on floors or pavements.

Seat Belts

Safety devices installed in vehicles that, when used properly, significantly reduce the risk of injury or death in the event of a crash by securing the occupant in place.

Healthy Food Choices

The selection of foods that contribute to overall health, including plenty of fruits, vegetables, whole grains, and lean proteins.

Safe Sex Practices

Behaviors and precautions taken to reduce the risk of sexually transmitted infections and unwanted pregnancies.