Question
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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