When Expectations Theory Is Combined with the Liquidity Theory, the Yield

question 51

True/False

When expectations theory is combined with the liquidity theory, the yield on a security will always be equal to the yield from consecutive investments in shorter-term securities over the same investment horizon.
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Definitions:

Stand-alone Principle

An approach to evaluating investment decisions without considering any potential impacts from external projects or operations.

Sunk Cost

A cost that has already been incurred and cannot be recovered, which should not affect future investment decisions.

Depreciation Cost

The allocated portion of an asset's initial cost over its useful life, recognized as an expense on financial statements.

Net Working Capital

The difference between a company's current assets and its current liabilities, indicating short-term financial health and operational efficiency.