If you were trying to describe the effect on the yield curve that certain investors have a definite preference for the maturity of the bonds that they invest in,then you would be referring to

Question

Quizplus · Accepted Answer

The preferred habitat theory suggests that investors have specific preferences for certain maturities of bonds based on their investment needs, risk preferences, and other factors. This can create imbalances in demand and supply for certain maturities, which can affect the shape of the yield curve. In contrast, the expectations theory and liquidity preference theory focus on other factors such as expectations of future interest rates and the demand for liquidity.

If You Were Trying to Describe the Effect on the Yield