QUESTION 29 The liquidity premium can be explained by the fact that O A. Borrowers are prepared to pay a premium to lenders for longer term loans. O B. Lenders are usually indifferent to lending at the short term and long term end of the market. OC. Investors expect the yield curve to fall in the short term. O D. Investors believe that the government s budget deficit will be unchanged in the future. QUESTION 30 If the value of a stock market index rises by 10% and at the same time the prices of two assets X and Y rise on average by 596 with corresponding variances of 0.25 and 0.64 respectively. then the covariance of asset X and Y returns is O A. 0.02 OB. 0.08 OC. 0.40 OD.0.16