According to the Liquidity Premium Theory,the Yield Curve Normally Has

question 23

Multiple Choice

According to the liquidity premium theory,the yield curve normally has a positive slope because

• A) short-term interest rates are expected to rise.
• B) term premiums rise as the time to maturity increases.
• C) risk premiums rise over time.
• D) long-term bonds are more liquid than short-term bonds.

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