Which of the following are possible explanations for the term structure of interest rates?

A) The expectations theory
B) The liquidity preference theory
C) Modern portfolio theory
D) The expectations theory and the liquidity preference theory

Term Structure

The relationship between interest rates (or bond yields) and different terms (or maturities), typically depicted in a yield curve.

Expectations Theory

A theory suggesting that long-term interest rates reflect the market's expectation for future short-term rates.

Liquidity Preference Theory

Theory that investors demand a risk premium on long-term bonds. Implies that the forward rate generally will exceed the expected future interest rate.