Capital Market Segmentation Is a Financial Market Imperfection Caused Mainly

question 9

Multiple Choice

Capital market segmentation is a financial market imperfection caused mainly by:

• A) government constraints.
• B) institutional practices.
• C) investor perceptions.
• D) all of the above

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Definitions:

Normal Good

A good for which demand increases as the income of consumers increases, showing a direct relationship between income and demand.

Inferior Good

A type of good for which demand decreases when the income of consumers increases, inversely related to income changes.

Indifference Curves

Curves that represent the locus of various points indicating combinations of goods giving equal satisfaction and utility to the consumer.

Inferior Good

A category of product that sees reduced demand as the income levels of buyers rise.