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Under the Liquidity Premium Theory a Flat Yield Curve Implies

Question 7

Multiple Choice

Under the Liquidity Premium Theory a flat yield curve implies:


A) there is no risk premium for longer-term maturities.
B) short-term interest rates are expected to remain constant.
C) short-term interest rates are expected to decrease.
D) long-term interest rates are higher than short-term interest rates.

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