The Segmented Markets Theory of Term Structure

question 6

Multiple Choice

The segmented markets theory of term structure:

• A) has difficulty explaining why yield curves are usually upward-sloping.
• B) has difficulty explaining why yield curves are usually downward-sloping.
• C) ignores the existence of market participants who seek to take advantage of price differences.
• D) provides a good explanation of why yields on bonds of varying maturities tend to move together.

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