The hypothesis that the markets for short- and long-term securities are completely separate markets is called the
A)stationary equilibrium hypothesis
B)preferred habitat hypothesis
C)the liquidity premium hypothesis
D)segmented market hypothesis

Question

Quizplus · Accepted Answer

The segmented market hypothesis suggests that the markets for short-term and long-term securities are completely separate, with different sets of buyers and sellers for each market segment. This implies that the conditions in one market (e.g., short-term) do not directly affect the conditions in the other market (e.g., long-term).

The Hypothesis That the Markets for Short- and Long-Term Securities