Which of the following is true of the market segmentation theory? a. According t

Question

Which of the following is true of the market segmentation theory? a. According to the market segmentation theory, the slope of the yield curve depends on supply/demand conditions of a security in the long- and short-term markets. O b According to the market segmentation theory, the shape of the yield curve depends on investors' expectations about future inflation rates. C. According to the market segmentation theory, lenders prefer to make short-term loans rather than long-term loans. O d. According to the market segmentation theory, the yield curve can only be upward sloping at any given time. e. According to the market segmentation theory, the yield curve can only be flat at any given time.

Explanation / Answer

According to market segmentation theory one can conclude that shape of yield curve is depend on the supply and demand conditions of a security.

So the correct answer will be option a.

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