Consider the Liquidity Preference Theory of the Term Structure of Interest

question 39

Multiple Choice

Consider the liquidity preference theory of the term structure of interest rates.On average,one would expect investors to require _________.

• A) a higher yield on short term bonds than long term bonds
• B) a higher yield on long term bonds than short term bonds
• C) the same yield on both short term bonds and long term bonds
• D) the liquidity preference theory cannot be used to make any of the other statements.

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