Explain the typical upward-sloping shape of the yield curve

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Question: Suppose the bond market expects short-term interest rates to remain constant for the foreseeable future, yet we observe a rising yield curve in the bond market. What can you then say about the preferred habitats of borrowers versus lenders? What is the name for this theory to explain the typical upward-sloping shape of the yield curve?

Reference no: EM131735482

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