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Business, 08.11.2021 02:50 cjtambasco

According to the liquidity premium theory of the term structure: a. bonds of different maturities are not substitutes.
b. if yield curves are downward sloping, then short-term interest rates are expected to fall by so much that, even when the positive term premium is added, long-term rates fall below short-term rates.
c. yield curves should never slope downward.
d. interest rates on bonds of different maturities do not move together over time.

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