Long-term interest rates are affected by
A)interest rate expectations.
B)preferred habitats.
C)liquidity premiums.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

Long-term interest rates are affected by interest rate expectations, preferred habitats, and liquidity premiums. Interest rate expectations refer to the expected future direction of interest rates, which can affect long-term rates. Preferred habitats refer to the tendency of investors to prefer certain maturities of bonds, which can also influence long-term rates. Liquidity premiums refer to the additional return demanded by investors for investing in less liquid securities, such as long-term bonds. Therefore, all of these factors can affect long-term interest rates.

Long-Term Interest Rates Are Affected by