Which Theory Is Consistent with an Observed Concentration of Investors

question 3

Multiple Choice

Which theory is consistent with an observed concentration of investors in particular segments of the term structure?

• A) segmented market
• B) liquidity premium
• C) expectations
• D) preferred habitat

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Definitions:

Period

A specified duration of time characterized by particular events, conditions, or phenomena.

Interest

The expense associated with taking out a loan, usually shown as a percentage of the total amount loaned.

Interest Earned

The amount of interest generated from an investment or savings over a certain period of time.

Account

A record or statement of financial expenditure and receipts relating to a specific period or purpose; also used to refer to a customer's relationship with a financial institution.