Of the Four Theories That Explain How Interest Rates on Bonds

question 102

Multiple Choice

Of the four theories that explain how interest rates on bonds with different terms to maturity are related,the one that assumes that bonds of different maturities are not substitutes for one another is the

• A) expectations theory.
• B) segmented markets theory.
• C) liquidity premium theory.
• D) preferred habitat theory.

---

Definitions:

Acquisition

The process or act of obtaining control, possession, or ownership of a company or assets by purchasing or merging with it.

Consolidation

A combination of two or more businesses in which all of the old legal entities dissolve and a new one with a new name is formed to continue into the future.

Vertical Merger

A vertical merger occurs between two companies that operate at different levels within an industry's supply chain, typically aimed at increasing efficiencies or reducing costs.

Horizontal Merger

A business consolidation that occurs between companies operating in the same industry or production stage.