Suppose that the yield on a 1-year security is 6%, and the yield on a 2-year security is 7%. Which of the following statements is true according to the liquidity preference hypothesis?

A. the one-year spot rate is expected to be 8% one year from now.

B. the one-year spot rate is expected to be less than 8% one year from now due to the liquidity premium.

C. the one-year spot rate is expected to be more than 8% one year from now due to the liquidity premium.

D. both securities have the same expected rate of return.