One of the following statements is not part of the segmented markets (hedging-pressure) theory of the yield curve. Which one is not?
A) All maturities of securities are perfect substitutes in the minds of investors
B) Many large institutional investors are risk minimizers
C) Many investing institutions follow the hedging principle
D) The market for medium-term securities attracts different investor groups than the long-term security market
E) All of the above statements are consistent with the segmented-market theory

Question

Quizplus · Accepted Answer

The segmented markets theory suggests that markets for different maturities are separate and distinct, with investors having preferences for bonds of one maturity over another. Statement A, which suggests that all maturities of securities are perfect substitutes, contradicts this theory by implying a lack of segmentation.

One of the Following Statements Is Not Part of the Segmented