Which One of the Following Statements Concerning the Modern Fixed-Income

question 6

Multiple Choice

Which one of the following statements concerning the modern fixed-income market is correct?

• A)Pension funds generally have a preference for short maturities.
• B)Current maturity preference theory states that both borrowers and lenders prefer short maturities.
• C)Market segmentation theory does little to explain the modern fixed-income market.
• D)The major borrower in the modern market borrows primarily on a long-term basis.
• E)Institutional investors tend to invest in only one maturity range.

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Definitions:

Corporation

A legal entity that is separate and distinct from its owners, who are shareholders; it has rights, privileges, and liabilities independent of those of its members.

Owners

Individuals or entities that legally possess, control, and derive benefits from property or a business.

Shareholders

Individuals or entities that own shares in a corporation, giving them partial ownership and possibly the right to vote on corporate matters.

Daily Management

The ongoing coordination and oversight of a business or organization's operations and activities on a day-to-day basis to ensure efficiency and effectiveness.