39. Since yield curves are usually upward sloping, the ______________ indicates that, on average, people tend to prefer holding short-term bonds to long-term bonds. A. market segmentation theory B. expectations theory

C. liquidity premium theory D. both A and B of the above E. both A and C of the above

40.The slope of the yield curve is frequently measured by the following bonds yield difference:

A. The 10 year Treasury Bond Less the 2 year Treasury Bond B. A 10 year AAA Corporate Bond less a 10 year BBB Corporate Bond C. A 10 year Treasury Bond less a 10 year Municipal Bond D. None of the above

41. The inverted yield is considered a signal of a potential A. Rate hike

    B. Recession C. Expansion D. Stock Rally

42. If the current 2 year rate is 2% and the 10 year rate is 3%, the current yield curve would most likely be

    A. Inverted. B. Normal. C. Flat.