问题如下：
1. Madison’s views on the term structure of interest rates are most consistent with the:
选项：
A.local expectations theory.
B.segmented markets theory.
C.liquidity preference theory.
解释：
C is correct.
Liquidity preference theory asserts that investors demand a risk premium, in the form of a liquidity premium, to compensate them for the added interest rate risk they face when buying long-maturity bonds. The theory also states that the liquidity premium increases with maturity.
"Yields are a reflection of expected spot rates and risk premiums. Investors demand risk premiums for holding long-term bonds, and these risk premiums increase with maturity."
这里强调了投资者对期限长的债券有一个risk premium, local expectation不是也就说risk premium在LT bond存在吗 好像选local expectation也没错啊。
