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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Definitions:

Long-Term Memory

The stage of memory involved in the storage and retrieval of information over an extended period.

Serial-Order Effect

A phenomenon observed in psychology where the order of information presentation affects memory and recall, with items presented early and late being remembered better than those in the middle.

List

A record of items, names, or tasks to be remembered, considered, or done, arranged in a systematic or sequential order.

Information Processing Model

A cognitive approach to understanding how the human mind transforms sensory information, involving stages such as encoding, storage, and retrieval of information.