If the Yield Curve Slope Is Flat,the Liquidity Premium Theory

question 45

Multiple Choice

If the yield curve slope is flat,the liquidity premium theory indicates that the market is predicting

• A) a mild rise in short-term interest rates in the near future and a mild decline further out in the future.
• B) constant short-term interest rates in the near future and further out in the future.
• C) a mild decline in short-term interest rates in the near future and a continuing mild decline further out in the future.
• D) constant short-term interest rates in the near future and a mild decline further out in the future.

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