Which of the following statements are true?
I. Lenders have a preference for shorter maturities.
II. Lenders have a preference for longer maturities.
III. Borrowers have a preference for shorter maturities.
IV. Borrowers have a preference for longer maturities.
A)I only
B)I and III only
C)I and IV only
D)II and III only
E)II and IV only

Question

Quizplus · Accepted Answer

Lenders typically have a preference for shorter maturities as it allows them to re-lend the money and earn interest again sooner. Borrowers, on the other hand, have a preference for longer maturities as it allows them to spread out their payments over a longer period of time and potentially pay a lower interest rate. Therefore, statement I and IV are true, while statement II and III are false.

Which of the Following Statements Are True