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Test. According to the liquidity premium theory and the term priority theory of the term structure of interest rates, a yield curve parallel to the
Test. According to the liquidity premium theory and the term priority theory of the term structure of interest rates, a yield curve parallel to the X axis means A. Expectations of future short-term interest rates will increase. B. The expected value of future short-term interest rates will remain unchanged. C. The expected value of future short-term interest rates will fall. D. Bondholders will no longer tend to hold short-term bonds.
Test. According to the liquidity premium theory and the term priority theory of the term structure of interest rates, a yield curve parallel to the X axis means
A. Expectations of future short-term interest rates will increase.
B. The expected value of future short-term interest rates will remain unchanged.
C. The expected value of future short-term interest rates will fall.
D. Bondholders will no longer tend to hold short-term bonds.
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