The Liquidity Preference Hypothesis Explains That the 2^nd Year Forward

Multiple Choice

The liquidity preference hypothesis explains that the 2^nd year forward rates are set higher than the expected spot rate over year two because:

A) of a downward sloping yield curve.
B) of long term rates being greater than short term rates.
C) investors must be induced to buy the riskier two-year bond.
D) two year bonds are less risk than one year's bonds when rates are higher.