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Which of the following is consistent with the bquidity premium theory of the yidd curver Cheok all that apply. If iequidity intluences the yield curve,

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Which of the following is consistent with the bquidity premium theory of the yidd curver Cheok all that apply. If iequidity intluences the yield curve, an upward-sloping yield curve suggests that the market thinks interest rates in the future wif increase. If tiquality influences the vield curve, the forward rate overestimates the market's expectation of the future interect rate. If liquidity influences the vield curve, the forward rate underestimates the market's expectabion of the future interest rate. If liquidity intluences the yield curve, an upward-sloping yield curve sapgests that the makket thinks interest fates in the future will decrease. Poomima would like to invest a certain amcant of money for two years and concoders investing in a one-year bond that pays 6 percent and a two-year bond that poys 8 percen. Poornima is considering the following investment strategies: Strategy A: buy a one year bond that pays 6 percent and in year one, then buy another one year bond that pays the forward rate in year two. Strategy B: Buy a two year bond that poys 8 percent in year one and 8 percent yoar two. If the one-year tond purchased in year two pays 6 percent, and the liquadiy prerrium on a two-year bend is 0.5 percert, poornima will choose. Which of the following describes conditions under which pocernama would be indifferent between strategr A and strategy as? the rate on the one yeir bond purchased in year two is 10.236 percent. The rate on the one year bond purdiased in year two is 9.080 percent. The rate on the onw year bond parchased in year two is 9.366 perceng. the rate on the one year bend purchased in year two is 9.853 percent

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