The Market Segmentation Theory Proposes That

question 191

Multiple Choice

The market segmentation theory proposes that:

• A)the yield curve is upward sloping since lenders prefer shorter-term loans.
• B)the debt market is represented by a single supply/demand diagram.
• C)the debt market is represented by a series of supply/demand diagrams each representing a different term, and that these operate independently of one another.
• D)the yield curve is inverted because lenders prefer longer-term loans at lower rates.

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Definitions:

Observed Time

The actual amount of time recorded for a task or process operation based on direct observation.

Futures Contract

A legally binding contract for the future transaction of goods or assets at a set price and predetermined date.

Cash Flows

Cash flows represent the net amount of cash and cash-equivalents being transferred into and out of a business, crucial for assessing its financial health, liquidity, and solvency.

Hedge

A strategy used in investing to minimize or offset the risk of adverse price movements in an asset.