Market segmentation theory, Finance Basics

Assignment Help:

Market Segmentation Theory

This theory states as the main investors lenders and borrowers are confined to a particular segment of the market and will not change even whether the forecast of the likely future interest rates changes.

The thrust of market segmentation theory is that the slope of yield curve depends on supply mechanism and demand. An upward sloping curve would happen if there was a large supply of funds relative to demand in the short term marketing although a relative shortage of funds in the long-term market would produce an upward sloping curve.

The lenders and borrower hence have a preferred maturity like a person borrowing to buy a house or a company borrowing to build a power plant would want a long term loan.  Although to build up stock a retailer borrowing in readiness for a peak reason would prefer for a short term loan. Related differences exist between savers like a person saving to pay school fees for next semester would want to lend upon in the short-term market.  For retirement a person saving 20 years ahead would perhaps buy long-term security in L.T. market.


Related Discussions:- Market segmentation theory

Aafafa, ksklklsdfmklsnakakngjkalkgblakbgklabgklagkbaskgbljas a kalks las l...

ksklklsdfmklsnakakngjkalkgblakbgklabgklagkbaskgbljas a kalks las lgaskgbak a lv aslglaksglas la sla

Journal entries, Sam start business with his savings $20000, a gift from hi...

Sam start business with his savings $20000, a gift from his parents $10000 and a personal loan from his friends of $5000. All money is deposited in a bank account.

Fixed Exchange vs Flexible Exchange Rate, Critize the flexible exchange rat...

Critize the flexible exchange rate regime from the viewpoint of the proponents of the fixed exchange rate regime

Vincent mind set, if u were the professor wht your opinion about vincent mi...

if u were the professor wht your opinion about vincent mind stage

Product mix, what are the qualitative factors to be considered when decidin...

what are the qualitative factors to be considered when deciding on product mix

Finance Project , Five years ago, you bought a house for $151,000, with a d...

Five years ago, you bought a house for $151,000, with a down payment of $30,000, which meant you took out a loan for $121,000. Your interest rate was 5.75% fixed. You would like to

Effective financial management, Financial management is very important for ...

Financial management is very important for any organization as at the end what does matter is the money. An effective financial management is of high importance for ensuring the be

Assignment, Discuss the applicabilty of such cycle to poultry business(cons...

Discuss the applicabilty of such cycle to poultry business(consider broilers)

Joint stock companies - types of business organisations, Joint Stock Compan...

Joint Stock Companies - Types of Business Organisations Initiators contribute to the capital support of those companies via the purchase of shares of those companies. These co

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd