You are a financial consultant and you have heard the following comment on interest rates from one of your clients: "The yield curve is upward sloping today. This suggests that the market consensus is that interest rates are expected to increase in the future." How would you respond to this comment? This is true This is false This is true if the pure expectations theory holds This is true if the liquidity premium theory holds This is true if the segmentation theory holds This is true if the liquidity premium theory holds but the liquidity premium is large enough. This is true if the liquidity premium theory holds but the liquidity premium is small enough.
