Which One of the Following Statements Concerning the Modern Fixed-Income

question 6

Multiple Choice

Which one of the following statements concerning the modern fixed-income market is correct?

• A)Pension funds generally have a preference for short maturities.
• B)Current maturity preference theory states that both borrowers and lenders prefer short maturities.
• C)Market segmentation theory does little to explain the modern fixed-income market.
• D)The major borrower in the modern market borrows primarily on a long-term basis.
• E)Institutional investors tend to invest in only one maturity range.

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Definitions:

Expected Returns

The anticipated profit or loss from an investment, taking into account the probability of different outcomes.

Stocks' Returns

Stocks' returns refer to the gain or loss made on an investment in stock, usually expressed as a percentage of the investment's initial value.

Maximizing Returns

In finance, it refers to strategies aimed at increasing the gain or profit from investments or business operations to the highest possible level.

Expected Value

The mathematical average of all possible outcomes of a random variable, weighted by their respective probabilities.