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:

Maturity Principle

The idea that traits associated with effective functioning increase with age.

Life-Threatening Illnesses

Life-threatening illnesses are severe health conditions that have the potential to lead to death if not treated effectively.

Emotional Well-Being

A state in which an individual experiences positive emotions, contentment, and fulfillment, and has the ability to cope effectively with daily life demands.

Meaningfulness

The quality of having significance, purpose, or value to an individual or community.