Which of the Following Statements About Segmented Markets Theory of Term

question 84

Multiple Choice

Which of the following statements about segmented markets theory of term structure is correct?

• A) It assumes that lenders always lend for short periods.
• B) It assumes that borrowers have particular periods for which they want to borrow.
• C) It gives a good explanation of why yield curves usually slope upward.
• D) It assumes that all bonds are perfect substitutes for each other.

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Definitions:

Company's Stock

Represents ownership shares in a corporation, giving holders a claim on parts of the company's assets and earnings.

Minimum Percentage

The lowest allowable or required fraction or rate of a quantity, often set as a standard or threshold.

Assets

Resources owned by a company, regarded as having value and available to meet debts, commitments, or legacies.

Invest

The action of allocating resources, usually financial, with the expectation of achieving a profit or material result.