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:

Accounting Profits

The difference between total revenues and explicit costs, representing the net income reported on a company's financial statements.

Economic Profits

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs.

Accounting Profits

The net income for a company after all expenses have been deducted from revenues, according to generally accepted accounting principles.