According to the Segmented Markets Theory, If Most Investors Suddenly

question 57

Multiple Choice

According to the segmented markets theory, if most investors suddenly preferred to invest in long-term securities and most borrowers suddenly preferred to issue short-term securities, there would be

• A)upward pressure on the yield of long-term securities .
• B)downward pressure on the yield of short-term securities .
• C)downward pressure on the yield of long-term securities.
• D)no change in the yield of short-term securities.

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Definitions:

Substitute Resource

A resource that can be used in place of another in production processes, often influencing supply and price levels.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a resource, such as labor or capital.

Law of Diminishing Returns

An economic principle stating that as one input in the production process is incrementally increased, holding all other inputs constant, there will be a point at which the added output from each additional unit of input will start to decrease.

Dollars Per Unit

A unit cost measure representing the price or cost of a single item or measure of goods or services.