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-Refer to Figures A, B, and C

Question 1

Multiple Choice

-Refer to Figures A, B, and C. According to expectations theory, which of the figures reflects expectations that the short-term interest rate is expected to remain constant in the future but that borrowers and lenders also must be compensated with a liquidity premium for lending long? A) Figure A B) Figure B C) Figure C D) Both a and b
-Refer to Figures A, B, and C. According to expectations theory, which of the figures reflects expectations that the short-term interest rate is expected to remain constant in the future but that borrowers and lenders also must be compensated with a liquidity premium for lending long?


A) Figure A
B) Figure B
C) Figure C
D) Both a and b

Correct Answer:

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