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valputin valputin
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8 years ago
If the yield curve is flat for short maturities and then slopes downward for longer maturities, the liquidity premium theory (assuming a mild preference for shorter-term bonds) indicates that the market is predicting
A) a rise in short-term interest rates in the near future and a decline further out in the future.
B) a decline in short-term interest rates in the near future and a rise further out in the future.
C) a decline in short-term interest rates in the near future and an even steeper decline further out in the future.
D) constant short-term interest rates in the near future and a decline further out in the future.
Textbook 
The Economics of Money, Banking and Financial Markets, Business School Edition

The Economics of Money, Banking and Financial Markets, Business School Edition


Edition: 4th
Author:
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Our course uses > The Economics of Money, Banking and Financial Markets
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MeelaMeela
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8 years ago
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valputin Author
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#2
8 years ago
Correct
Our course uses > The Economics of Money, Banking and Financial Markets
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#3
8 years ago
You're very welcome, valputin
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