Segmented markets hypothesis states that the market for investments is more appropriately thought of as a collection of disjoint or segmented markets based on the investment horizon of the assets in question.

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The segmented markets hypothesis suggests that financial markets are divided into segments based on the maturity of the securities, and that the supply and demand within each segment determine the interest rates for that segment independently of other segments. This implies that investors have preferences for certain maturities based on their investment horizons, leading to disjoint or segmented markets for different maturities of investments.

Segmented Markets Hypothesis States That the Market for Investments Is