CFA Practice Question

There are 147 practice questions for this study session.

CFA Practice Question

The ______ theory FAILS to explain why the yield curve is upward-sloping most of the time.
A. pure expectations
B. preferred habitat
C. market segmentation
Explanation: The pure expectations theory assumes an unbiased expected interest rates (they are just likely to underestimate future interest rates as they are to overestimate them).

User Contributed Comments 3

User Comment
dblueroom Does market segmentation theory explain why the yield curve is upward-sloping most of the time?
JohnnyWu I am wondering the same.
BryonBUI Market segmentation can explain any yield curve.
You need to log in first to add your comment.