According to the liquidity preference hypothesis, which of the following statements is correct? a. If term structure of interest rate is flat, then future short-term rates are expected to keep unchanged. b. •The return on investing a two-year bond equals the return of two one-year rollover investments. C. If term structure of interest rate is upward, then future short-term rates are expected to increase. d. If term structure of interest rate is downward, then future short-term rates are expected to decrease. e. The return on investing a two-year bond is less than the return of two one-year rollover investments.

According to the liquidity preference hypothesis, which of the following statements is correct? a. If term structure of interest rate is flat, then future short-term rates are expected to keep unchanged. b. •The return on investing a two-year bond equals the return of two one-year rollover investments. C. If term structure of interest rate is upward, then future short-term rates are expected to increase. d. If term structure of interest rate is downward, then future short-term rates are expected to decrease. e. The return on investing a two-year bond is less than the return of two one-year rollover investments.

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter5: The Cost Of Money (interest Rates)

Section: Chapter Questions

Problem 19PROB

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