_____________ can explain why the interest rates on bonds of different maturities tend to move together....

_____________ can explain why the interest rates on bonds of different maturities tend to move together.

Select one: Only the expectations theory Both the segmented markets theory and the liquidity premium theory Both the expectations theory and the liquidity premium theory Only the liquidity premium theory Only the segmented markets theory

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Expert Solution

Segmented theory and liquidity theory both these theories can justify the interest rates on the bonds going equally with different maturity dates.

This would be the case in segmented and liquidity theory because where the former suggests that there stands no connection between the intrest rates of long term and short term, there rates might be charged as per their liquidity status. Hence both these theories justify the statement.

Rahul Sunny answered 1 year ago

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