According to the liquidity premium theory of the term structure, A. the interest rate on long-term bonds will equal an average of short-term interest rates that people expect to occur over the life of the long-term bonds plus a liquidity premium. B. buyers of bonds may prefer bonds of one maturity over another, yet interest rates on bonds of different maturities move together over time. C. even with a positive liquidity premium, if future short-term interest rates are expected to fall significantly, then the yield curve will be downward-sloping. D. all of the above. E. only A and B of the above.

Answer: D. all of the above.

Explanation:

The liquidity premium is the amount that is added to the interest rate in order to compensate investors for buying longer term and less liquid securities. This is why the interest rates on log-term bonds include a liquidity premium.

It is true that depending on preference, buyers of bonds prefer to buy one maturity over another but overall, the interest rates on different maturities move together in that an increase in the short term would see an increase in the long term.

Even if the liquidity premium is positive in order to compensate investors for longer maturities, it would not be enough to pull the interest rates up if they are falling significantly which would lead to a downward - sloping yield curve.

Spackel Corporation recorded the following events last year: Issuance of shares of the company's own common stock $ 380,000 Purchase of long-term investment $ 40,000 Dividends paid to the company's own shareholders $ 18,000 Cash paid to suppliers for inventory purchases $ 12,000 Repayment of principal on the company's own bonds $ 370,000 Interest paid to lenders $ 6,000 Collection by Spackel of a loan made to another company $ 110,000 Purchase of equipment $ 350,000 On the statement of cash flows, some of these events are classified as operating activities, some are classified as investing activities, and some are classified as financing activities. Based solely on the information above, the net cash provided by (used in) investing activities on the statement of cash flows would be: Multiple Choice $(280,000) $(760,000) $(1,286,000) $(390,000)

I can't believe it, said Wiley Coyote, I am the president of Acme enterprises and we make $200,000 a year profit with me working my tail off. Our distributor, Road Runner Representatives, made over $800,000 in commissions. I don't understand why they are making all of that money when all they do is run around all day and say beep-beep to customers. I think we should lower the commission rate to bring their income down to a more reasonable level. This is an example of

Name any FIVE causes of stress in the workplace​

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Which of the following will increase the money supply? Question 17 options: an increase in the discount rate (relative to the federal funds rate) a decrease in the required reserve ratio an open market sale by the Fed a and c b and c

Jon enjoys fishing (which costs $20) and golf (which costs $30) and has $140 to spend each month on these activities. Last month, Jon fished four times and golfed twice. The last fishing outing provided Jon a marginal utility of 50, and the last round of golf provided a marginal utility of 120. What is Jon's marginal utility per dollar spent on the last time fishing

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