1. Explain why long-term interest rates are higher than short-term rates most of the time. Un-...

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1. Explain why long-term interest rates are higher than short-term rates most of the time. Un- der what circumstances would you expect long-term rates to be lower than short-term rates? (3 marks) 2. How many investment-grade ratings does Moody's use? What are they? (2 marks) 3. Can the existence of downgrade triggers increase default risk? Explain your answer. (3 marks) 4. What are the factors that affect the liquidity of a financial asset? (2 marks) 1. Explain why long-term interest rates are higher than short-term rates most of the time. Un- der what circumstances would you expect long-term rates to be lower than short-term rates? (3 marks) 2. How many investment-grade ratings does Moody's use? What are they? (2 marks) 3. Can the existence of downgrade triggers increase default risk? Explain your answer. (3 marks) 4. What are the factors that affect the liquidity of a financial asset? (2 marks)