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Question
If the yield curve slope is flat for short maturities and then slopes steeply upward for longer maturities, the liquidity premium theory (assuming a mild preference for shorter-term bonds) indicates that the market is predictingA. a rise in short-term interest rates in the near future and a decline further out in the future.
B. constant short-term interest rates in the near future and further out in the future.
C. a decline in short-term interest rates in the near future and a rise further out in the future.
D. constant short-term interest rates in the near future and a decline further out in the future.
Answer
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Related questions
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B. U.S. Treasury.
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B. banks.
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A. consumption function
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