Which of the following theories argues that individual investors and financial institutions have specific maturity preferences, and to encourage buyers to hold securities with maturities other than their most preferred requires a higher interest rate?

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The Market Segmentation Theory suggests that the bond market is segmented on the basis of the maturity preferences of investors and borrowers. Investors have specific maturity preferences, and to entice them to hold securities outside their preferred maturity, a higher interest rate is required.

Which of the Following Theories Argues That Individual Investors and Financial