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3. In your own words, explain why the spot rates on the yield curve may first increase then decrease with the horizon. Your answer should

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3. In your own words, explain why the spot rates on the yield curve may first increase then decrease with the horizon. Your answer should include a detailed discussion of the expectation hypothesis, the liquidity preference theory, and their impact on the shape of the yield curve. (max 400 words) (20 marks)

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