Market Segmentation Theory Explains the Typical Upward Sloping Shape of Yield

question 32

Multiple Choice

Market segmentation theory explains the typical upward sloping shape of yield curves as a function of

• A) normally greater demand for long-term bonds than for short-term notes.
• B) normally greater demand for short term notes than for long-term bonds.
• C) expectations that inflation will be higher in the future than it is now.
• D) the greater liquidity of short-term notes as compared to long-term bonds.

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