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According to the Liquidity Premium Theory of interest rates A) People demand a higher return for longer-term investments because it is harder to predict how

According to the Liquidity Premium Theory of interest rates

A)

People demand a higher return for longer-term investments because it is harder to predict how the current price will be affected by changes in future interest rates.

B)

Investors prefer certain maturities and and will not normally switch out of those maturities.

C)

Investors are indifferent between different maturities if the yield curve is upward sloping (normal).

D)

Long-term interest rates are the average of current interest rates.

E)

Investors always prefer an inverted or downward sloping yield curve.

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