According to the Segmented Markets Theory of the Term Structure

question 39

Multiple Choice

According to the segmented markets theory of the term structure

• A)the interest rate on long-term bonds will equal an average of short-term interest rates that people expect to occur over the life of the long-term bonds.
• B)buyers of bonds do not prefer bonds of one maturity over another.
• C)interest rates on bonds of different maturities do not move together over time.
• D)buyers require an additional incentive to hold long-term bonds.

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Definitions:

S-R Association

The connection between a stimulus (S) and the response (R) it triggers, fundamental to behaviorist theories of learning.

Behavior-Reinforcement Belief

The conviction that the likelihood of a behavior occurring can be increased by following it with a positive consequence or reward.

Associative Expectancy

The belief or expectation that a particular stimulus will be followed by another stimulus or response, based on experiences of association between the two.