Which statement(s) are true regarding the liquidity premium theory:
A) States that long-term rates are equal to geometric averages of current and expected short-term rates.
B) Liquidity premiums that increase with maturity result in upward sloping yield curves.
C) An upward sloping yield curve may reflect investor's expectations that future short-term rates will be flat.
D) All of the above.
Correct Answer:
Verified
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