Suppose that interest rates are expected to remain unchanged over the next few

years. However, there is a risk premium for longer$-$term bonds. According to the

liquidity premium theory, the yield curve should be:

Upward sloping and very steep

Moderately upward sloping

Inverted

Vertical

Why interest rates on bonds with different terms to maturity tend to move together

over time

Why yields on short$-$term bonds are more volatile than yields on long$-$term bonds

Why longer$-$term yields tend to be higher than shorter$-$term yields

All of the above

None of the above