The degree to which the Treasury's debt management policy could affect the term structure of interest rates is greatest if
A) most debt is financed by foreign investors.
B) the Treasury's debt level is small.
C) maturity markets are segmented.
D) A and B

Question

Quizplus · Accepted Answer

If maturity markets are segmented, the Treasury's debt management policy can have a greater impact on the term structure of interest rates. This is because investors in different maturity markets may not be able to transfer their holdings easily between markets, and therefore, changes in the supply and demand of Treasury securities in one market may not be fully reflected in the prices of securities in other markets. This can result in greater volatility in interest rates and can affect the overall level of interest rates in the economy. The other options are not relevant to the degree of impact of the Treasury's debt management policy on the term structure of interest rates.

The Degree to Which the Treasury's Debt Management Policy Could