The key assumption of the liquidity premium theory is that investors
A) view bonds of different maturities as perfect substitutes.
B) view bonds of different maturities as completely unsubstitutable.
C) always choose the bond with the highest expected return, regardless of maturity.
D) care about both expected returns and time to maturity.
D
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Specialization and trade benefits all participants only if: a. They specialize in those things they have both a comparative and absolute advantage in
b. They specialize in those things they have a comparative advantage in, even if they have an absolute disadvantage. c. They specialize in those things they have an absolute advantage in, even if they have a comparative disadvantage. d. Traders have the same opportunity cost of production
Which of the following limits the price a monopolist charges?
a. patents b. copyrights c. competition from other firms d. market demand e. market supply
Imagine that you are a member of the Board of Governors of the Federal Reserve. If the economy is experiencing rapid inflation, what actions might you advocate? Why?
From the late 1960s to the late 1980s, SAT scores in the United States
a. help explain the productivity increases. b. rose consistently throughout the period. c. declined throughout the period. d. indicated improving workforce quality.