Multiple Choice
The liquidity premium theory of the term structure proposes:
A) it is the relative supply and demand of securities in the various maturity ranges that determines yields.
B) investors have a preference for short-term bonds, as they have greater liquidity.
C) longer-term bonds have less default risk.
D) longer-term bonds are less volatile in price.
Correct Answer:
Verified
Correct Answer:
Verified
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