Which of the following statements regarding the different theories of the term structure of interest rates is FALSE? A) The market segmentation theory, pure expectations theory, preferred habitat theory, and liquidity preference theory are all consistent with any shape of the yield curve. B) The preferred habitat theory can be described as investors that prefer to stay within a particular maturity range of the yield curve regardless of yields in other maturity ranges. C) An upward sloping yield curve can be consistent with the liquidity preference theory even with expectations of declining short term interest rates. D) With the market segmentation theory the shape of the yield curve is determined by the supply and demand of bonds at various maturities.
A
Not according to Schweser… I put down A as well
it’s B preferred habitat theory I believe states that investors can be induced by yields @ other maturities to change maturity range
You win the prize!
can my prize be passing Level 1 without writing it 
please?
getterdone Wrote: ------------------------------------------------------- > can my prize be passing Level 1 without writing it > please? Hey… I got confused with the wording! This time +1 to you!
finally I read the Q right eh strange! Have you done any of the mock exams from CFAI strange? If so, how did you find their level of difficulty?
getterdone Wrote: ------------------------------------------------------- > finally I read the Q right eh strange! > > Have you done any of the mock exams from CFAI > strange? If so, how did you find their level of > difficulty? I just went through the ethic session and I think it is very similar to the Q that we have… I did two mistakes…However I still have to go through the other sessions. What about u?
not yet, was thinking about ordering it, the only Q’s I have done is the Schweser book 6 and Q’s at the end of chapters for schweser and CFA books. I got the mock exam from the thread where everyone was requesting it. I think I might order the 2 from CFAI for $100 and do one this weekend and one next week just to brush up right before the exam. I think the Q’s on this site though are awesome. I definitely think that people who use this site and have access to more material and information will have a higher prob of passing this thing. If I were a betting man I would say your going to pass my friend!
getterdone Wrote: ------------------------------------------------------- > not yet, was thinking about ordering it, the only > Q’s I have done is the Schweser book 6 and Q’s at > the end of chapters for schweser and CFA books. I > got the mock exam from the thread where everyone > was requesting it. > > I think I might order the 2 from CFAI for $100 and > do one this weekend and one next week just to > brush up right before the exam. > > I think the Q’s on this site though are awesome. I > definitely think that people who use this site and > have access to more material and information will > have a higher prob of passing this thing. If I > were a betting man I would say your going to pass > my friend! I hope so…you will pass too! You are well prepared! I also think that this forum it is very helpful and there are some Qs which are very tricky and difficult (this is good!). Where are you sitting for the exam?
Toronto, direct energy center. I think I remember you saying that you were in Australia correct? Are there alot of people writing there?
getterdone Wrote: ------------------------------------------------------- > Toronto, direct energy center. I think I remember > you saying that you were in Australia correct? Are > there alot of people writing there? I am in London (UK)…I think there will be around 8000 people here…crazyyyyyyy!!
yeah its B. investors can be given high premium to move them out of their maturity zone.
I under why b is wrong, but why is A right? any shape can be consistent with all theories?