One of the Major Differences Between the Market Segmentation and Preferred

question 41

Multiple Choice

One of the major differences between the market segmentation and preferred habitat theories is that in the latter, investors

• A) will strictly adhere to the preferred market segment.
• B) will shift out of their preferred habitat based on hedging strategies.
• C) will leave their desired maturity segment if there are differences in yields between segments.
• D) face positive or negative risk premia in various segments.

---

Definitions:

Worldview

A comprehensive perspective from which one sees and interprets the world and interacts with it.

Assumptions

Statements or ideas accepted as true without proof, serving as the basis for further reasoning or argument.

Placebo

A substance used in experiments that has no therapeutic effect.

Therapeutic Effect

The beneficial outcome of a treatment or intervention on the health or well-being of an individual or population.