Version B 25) In our discussion, the real rate of interest A. includes inflation B. reflects risk and liquidity premiums C. is the supply-demand equilibrium rate in a perfect world, without inflation D. none of above 20) The expectations theory suggests that the shape of the yield curve reflects A. investors' liquidity preference B. investors' expectations about future interest rates C. the fact that the market for loans is segmented on the basis of maturity D. none of above 27) Upward-sloping yield curves result from A. higher future inflation expectations B. lender preferences for shorter maturity loans C. greater supply of short-term as opposed to long-term loans relative to their respective demand D. all of above 28) The term structure of interest rates is the relationship between A. the present value of principal and coupon rate of the bonds B. the general expectation of inflation and nominal rate of return for bonds C. the maturity and rate of return for bonds with similar level of risk D. the general expectation of inflation and real rate of return for bonds