Which of the Following Is True of the Segmented Markets

question 2

Multiple Choice

Which of the following is true of the segmented markets theory?

• A)It assumes that borrowers have particular periods for which they want to borrow.
• B)It assumes that lenders always lend for short periods.
• C)It provides a good explanation for why yield curves usually slope upward.
• D)It assumes that instruments with different maturities are perfect substitutes.

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Definitions:

Excess Cash

Surplus funds that exceed the normal operating needs of a business, often invested in short-term securities or used for acquisitions.

Fair Value Adjustment

An accounting process of updating the reported value of an asset or liability to reflect its current market value.

Noncontrolling Interest

An ownership position in a corporation in which the shareholder does not have sufficient voting power to enact changes or control the company’s operations.

Strategic Reasons

The underlying motives or rationales that guide a company's decisions and actions to achieve long-term objectives and competitive advantage.