Question

According to this theory of the term​ structure, bonds of different maturities are not substitutes for one another.

A. Separable markets theory.
B. Liquidity premium theory.
C. Segmented markets theory.
D. Expectations theory

Answer 1

Answer: For the given question the following option is the most suitable one: Segmented markets theory

This theory states that long and short-term interest rates are not accompanying to each other. It also states that the predominant interest rates for short, in-between, and long-term bonds should be viewed individually like unit in different securities industry for debt instrument.

The correct option in this case is (c)