The addition of the liquidity premium theory to the expectations hypothesis allows us to explain why

Multiple Choice

• yield curves usually slope upward.

• interest rates on bonds of different maturities move together.

• long-term interest rates are less volatile than short-term interest rates.

• yield curves are flat.

The risk structure of interest rates refers to the

Multiple Choice

• additional interest required to compensate the buyer for the longer maturity of the bond.

• relationship among the interest rates of bonds with different maturities.

• relationship among the interest rates of bonds from different issuers with the same maturities.

• relationship among the interest rates of bonds from the same issuer but different maturities.