If the liquidity preference hypothesis is true, what shape should the term structure curve have in a

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If the liquidity preference hypothesis is true, what shape should the term structure curve have in a period where interest rates are expected to be constant?
a. Upward sloping.
b. Downward sloping.
c. Flat.

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Investments

ISBN: 9780073530703

9th Edition

Authors: Zvi Bodie, Alex Kane, Alan J. Marcus

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Question Posted: Jan 04, 2013 07:56 AM

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If the liquidity preference hypothesis is true, what shape should the term structure curve have in a

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Answer a Upward sloping Explanation As the higher risk premium is entitled to the securities ...View the full answer

Investments

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