Which of the Following Theories Argues That Individual Investors and Financial

question 48

Multiple Choice

Which of the following theories argues that individual investors and financial institutions have specific maturity preferences, and to encourage buyers to hold securities with maturities other than their most preferred requires a higher interest rate?

• A)Liquidity premium hypothesis
• B)Market segmentation theory
• C)Supply and demand theory
• D)Unbiased expectations theory

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Definitions:

Obligation

A duty or commitment that an individual is required to fulfill by law, promise, or moral principles.

Constitution

The fundamental principles or established precedents according to which a state or other organization is governed.

Confidentially Waived

A situation where an individual voluntarily gives up their right to privacy regarding certain information.

Furtherance of Crime

Actions that assist in or contribute to the commission or continuation of a criminal act.