According to the market segmentation theory an up
According to the market segmentation theory, an upward sloping yield curve is most likely due to:
A. investor expectations that short-term interest rates will fall in the future.
B. an increasing yield premium required by investors for bearing interest rate risk.
C. different levels of supply and demand for short-term and long-term funds.
参考解答
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2024-11-14 19:10:55
Ans:C;C is correct because the market segmentation theory asserts that the supply and demand for funds determine the interest rates for each maturity sector.A is not correct because pure expectations theory rather than market segmentation theory states that the yield for a particular maturity is an average of the short-term rates that are expected in the future. If the short-term rates are expected to rise in the future, the yield curve will be downward sloping.B is not correct because liquidity premium theory rather than market segmentation theory believes that investors require a risk premium for holding longer term bonds and bearing greater interest rate risk (duration).
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