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Suppose the yield curve is upward sloping, but that expected future short-term rates are constant. This may be because

A) compounding results in non-linear e?ects which increase long-term yields
B) bondholders prefer to hold short-term bonds for liquidity reasons

C) bondholders prefer to hold long-term bonds for liquidity reasons

D) markets are irrational

E) none of the above

Basic Finance, Finance

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