Consider the liquidity preference theory of the term structure of interest rates. On average, one would expect investors to require ________.

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According to the liquidity preference theory, investors generally prefer to hold short-term bonds rather than long-term bonds because they offer greater liquidity and less risk. Therefore, investors will generally require a higher yield on long-term bonds to compensate for the additional risk and lack of liquidity. This is why the yield curve typically slopes upward, with longer-term rates being higher than short-term rates.

Consider the Liquidity Preference Theory of the Term Structure of Interest