According to Segmented Markets Theory, If Investors Have Mostly Long-Term

question 23

Multiple Choice

According to segmented markets theory, if investors have mostly long-term funds available and borrowers want short-term funds, this will place ____ pressure on the demand for long-term funds issued by borrowers and the yield curve will be ____ sloping.

• A)upward; downward
• B)downward; upward
• C)upward; upward
• D)downward; downward

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Definitions:

Discount Rate

The discount rate applied in the computation of present value through discounted cash flow analysis for future cash flows.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Investment Proposal

A document or plan proposing a financial investment, detailing the strategy, risks, and expected returns.

Salvage Value

This is the estimated resale value of an asset at the end of its useful life.