1. Which of the following statements is incorrect?

(a) According to the Pure Expectations Theory, a at yield curve should be typical.

(b) The Pure Expectations Theory asserts that the yield curve is explained solely by investorsinterest rate expectations.

(c) According to the Liquidity Preference Theory, short term interest rates are higher than long term interest rates because they contain positive maturity premiums.

(d) None of the above statements are incorrect. (All of the above statements are correct.)