The Segmented Markets Theory of Term Structure

question 89

Multiple Choice

The segmented markets theory of term structure:

• A) explains upward-sloping yield curves as a result of the demand for long-term bonds being high, relative to the demand for short-term bonds.
• B) explains upward-sloping yield curves as a result of the demand for long-term bonds being low, relative to the demand for short-term bonds.
• C) explains upward-sloping yield curves as a result of the favourable tax treatment of long-term bonds.
• D) is unable to explain upward-sloping yield curves.

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