The market segmentation theory assumes that investors are risk-neutral.

Name: The market segmentation theory assumes that investors are risk-neutral.
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The market segmentation theory does not assume investors are risk-neutral; instead, it suggests that the bond market is segmented on the basis of maturity, with investors having preferences for bonds of certain maturities based on their specific investment objectives, risk profiles, and liabilities, rather than assuming a universal risk-neutral stance.

The Market Segmentation Theory Assumes That Investors Are Risk-Neutral