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Liquidity Preference Theory

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Which of the following statements explains the Liquidity Preference Theory of the term structure of interest rates?

A

Investors will pay higher prices for longer term securities.

B

Investors demand a higher yield for securities that cannot be sold quickly at high prices.

C

Investors demand a higher rate of return on longer term securities with greater price risk and less marketability.

D

Investors will pay higher prices for securities with greater price risk and less marketability.