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    Money Banking and Financial Markets Study Set 2
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    Exam 7: The Risk and Term Structure of Interest Rates
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    Under the Liquidity Premium Theory, If Investors Expect Short-Term Interest
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Under the Liquidity Premium Theory, If Investors Expect Short-Term Interest

Question 38

Question 38

Multiple Choice

Under the Liquidity Premium Theory, if investors expect short-term interest rates to remain constant, the yield curve should:


A) Have a positive slope
B) Have a negative slope
C) Be flat
D) Have an increasing slope

Correct Answer:

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