The assumption that prices for short-term and long-term securities are determined independently is the basis for the __________ approach to explaining the term structure.
A) liquidity preference
B) supply and demand
C) expectations
D) yield curve

Question

Quizplus · Accepted Answer

The supply and demand approach assumes that the prices for short-term and long-term securities are determined independently based on their respective supply and demand dynamics.

The Assumption That Prices for Short-Term and Long-Term Securities Are