Market Segmentation Theory Explains the Typical Upward Sloping Shape of Yield

question 32

Multiple Choice

Market segmentation theory explains the typical upward sloping shape of yield curves as a function of

• A) normally greater demand for long-term bonds than for short-term notes.
• B) normally greater demand for short term notes than for long-term bonds.
• C) expectations that inflation will be higher in the future than it is now.
• D) the greater liquidity of short-term notes as compared to long-term bonds.

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Definitions:

Gross Profit Method

A method of estimating inventory cost that is based on the relationship of gross profit to sales.

Merchandise Destroyed

Goods that have been rendered unusable and unsellable due to damage, mishandling, or disaster.

Internal Control Steps

Procedures and measures adopted by a company to safeguard its assets, ensure financial report accuracy, and promote operational efficiency.

Receiving Report

A document used to record the receipt of goods from suppliers, detailing the quantities and condition of items delivered.