Question: Are these statements correct? Statement 1: The segmented market theory assumes that bond market participants are limited to purchase maturities that match the timing of
Are these statements correct?
Statement 1: The segmented market theory assumes that bond market participants are limited to purchase maturities that match the timing of their liabilities.
Statement 2: The preferred habitat theory assumes that bond market participants have a preferred maturity for asset purchases, but may deviate from it if they feel returns in other maturities offer sufficient compensation for leaving their preferred habitat segment.
| A. | Both statements are correct. | |
| B. | Both statements are not correct | |
| C. | Only statement 1 is correct. | |
| D. | Only statement 2 is correct. |
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