What Is the Most Important Contrast Between the Segmented Markets

question 3

Multiple Choice

What is the most important contrast between the segmented markets theory and the expectations theory?

• A)The expectation theory states that investors view similar assets that differ only with respect to maturity as perfect substitutes.
• B)The segmented markets theory states that investors view similar assets that differ only with respect to maturity as perfect substitutes.
• C)The expectations theory does a better job of explaining why yield curves typically are upward-sloping.
• D)The segmented markets theory does a better job of explaining why yields on instruments of different maturities tend to move together.

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