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point) The key assumption of the liquidity premium theory is that investors view bonds of different maturities as perfect substitutes view bonds of different maturities

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point) The key assumption of the liquidity premium theory is that investors view bonds of different maturities as perfect substitutes view bonds of different maturities as completely unsubstitutable. always choose the bond with the highest expected return, regardless of maturity care about both expected returns and time to maturity

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