Many fixed-income portfolio managers are limited in or prohibited from high-yield bond investments. When a bond is downgraded from an investment-grade to a high-yield (junk) rating, it is referred to as a fallen angel. Because of restrictions, many pension funds sell fallen angels when they are downgraded from investment grade to high yield (junk). This coordinated selling action often results in depressed prices and attractive yields for the fallen angels. Which of the following reasons best explains why fallen angel yields often exceed otherwise identical bonds?

A. The preferred habitat theory

B. The segmented markets theory

C. The local expectations theory