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

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

Select one:

Both the expectations theory and the liquidity premium theory

Only the liquidity premium theory

Only the segmented markets theory

Both the segmented markets theory and the liquidity premium theory

Only the expectations theory

Expert Solution

Answer = correct option is A

Both expectations Theory and liquidity premium theory can explain why interest rates on bonds of different maturities tend to move together.

Segmented theory cannot explain this because for each maturity bond , interest is determined by demand and supply for that particular maturity bond only.

Rahul Sunny answered 2 years ago

_____________ 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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