Why does the liquidity- preference hypothesis help to explain the commonly occurring upward slope of yield curves?

Question

Quizplus · Accepted Answer

The liquidity-preference hypothesis suggests that investors prefer to hold short-term bonds because they are more liquid and less risky than long-term bonds. Therefore, investors require an extra return for lending long-term. This extra return is reflected in the yield curve, which typically slopes upward because long-term interest rates are higher than short-term interest rates.

Why Does the Liquidity- Preference Hypothesis Help to Explain the Commonly