CFA Practice Question

There are 147 practice questions for this study session.

CFA Practice Question

Segmented markets theory suggests the shape of the yield curve is determined mainly by:

A. supply and demand for funds of a particular maturity.
B. investor expectations.
C. liquidity premiums.
Correct Answer: A

Various investors and borrowers are restricted by law, preference or custom to certain securities. In each maturity sector the demand and supply determine the yield due to these institutional restrictions.

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