Which of the following theories is consistent with yield curves sloping upward most of the time?
I.market segmentation theory
II.expectations theory
III.liquidity preference theory
IV.theory of evolution

Question

Quizplus · Accepted Answer

Both market segmentation theory and liquidity preference theory suggest that long-term interest rates are higher than short-term rates, resulting in an upward sloping yield curve. Expectations theory does not necessarily imply an upward sloping curve, as it suggests that the shape of the curve depends on market expectations for future interest rates. The theory of evolution is not related to yield curves.

Which of the Following Theories Is Consistent with Yield Curves