Suppose that the current yield for a 20-year Treasury bond falls below the current one-year bond yield. Which of the following is true regarding the segmented markets theory of the term structure of interest rates in this case?
A. The 20-year bond yield falls below the one-year bond yield because the interest rate on the one-year bond is expected to fall in this case.
B. The one-year bond yield lies above the 20-year bond yield because investors prefer long-term bonds in this case
C. The 20-year bond yield falls below the one-year bond yield because people prefer shorter-term bonds in this case.
D. The 20-year bond yield exceeds the one-year bond yield because investors require a liquidity premium for bonds with a longer term to maturity in this case.