Assess the following statements: I. The traditional liquidity premium theory states that long term interest rates are greater than the average of expected future interest rates. II. According to the...

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Extracted text: Assess the following statements: I. The traditional liquidity premium theory states that long term interest rates are greater than the average of expected future interest rates. II. According to the market segmentation theory short term investors will not normally switch to intermediate or long term investments. III. The liquidity premium theory of interest rates states that the term structure must always be upward sloping. IV. The liquidity premium theory of interest rates states that investors are indifferent between different maturities if the long term spot rates are equal to the average of current and expected future short term rates. O Three statements are correct. Four statements are correct. O Only one statement is carrect. Two statements are correct.