If the yield curve is observed to be flat,according to the liquidity premium theory,this indicates that the market is predicting:
A) a small rise in short-term rates in the near future and a small decline further out in the future.
B) constant short-term interest rates in the near future, and further out in the future.
C) a small decline in short-term interest rates in the near future, continuing to decline slowly further out in the future.
D) constant short-term interest rates in the near future and a small decline further out in the future.
Correct Answer:
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