To select: The shape of the term structure curve is to be determined where interest rates are expected to be constant. Introduction: The uncertainty in the interest rate varies or increases with time, and based on this concept,liquidity preference is proposed. The investor will prefer to lend money for a shorter period, and the borrower will prefer to borrow money for a longer period.

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Chapter 15, Problem 4PS

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To select: The shape of the term structure curve is to be determined where interest rates are expected to be constant.

Introduction:The uncertainty in the interest rate varies or increases with time, and based on this concept,liquidity preference is proposed. The investor will prefer to lend money for a shorter period, and the borrower will prefer to borrow money for a longer period.

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