The liquidity premium theory of the term structure of interest rates
A.
assumes that investors will hold long-term maturity assets if there is a sufficient premium to compensate for the uncertainty of the long-term .
B.
assumes that long-term interest rates are an arithmetic average of short-term rates plus a liquidity premium .
C.
recognizes that forward rates are perfect predictors of future interest rates.
D.
assumes that risk premiums increase uniformly with maturity.