The Belief That Investors Require a Higher Return to Entice

question 110

Multiple Choice

The belief that investors require a higher return to entice them into holding long-term securities is the viewpoint of the

• A) the expectations hypothesis.
• B) segmentation theory.
• C) the liquidity premium theory.
• D) market credit crunch theory.

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Definitions:

Premium

The amount paid for an insurance policy or the amount by which a bond or stock sells above its par or face value.

Acquiring Firms

Companies that purchase the majority of equity shares of another company in order to take control of it.

Debt Restructuring

The process of negotiating and agreeing to new terms for debts with creditors to achieve some reduction in the financial burden.

Equity

The value of an ownership interest in property, including shareholders' equity in a company, which represents assets minus liabilities.