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

IS LM, After carefully reading all the available information, prepare a two...

After carefully reading all the available information, prepare a two page (double-spaced) essay and answer the following questions: Assume that we have the following data: C=100+0.

Finance Assignment, I have an assignment for my finance class. The company ...

I have an assignment for my finance class. The company that i have FOR industry analysis is COSTCO WHOLESALES CORP THAT ITS STOCK IS IN DISCOUNT AND VARIETY StORES INDUSTRY. I need

Debenture finance, Debenture Finance A type of long term debt raised a...

Debenture Finance A type of long term debt raised after a company sells debenture certificates to the holder and raises finance in return. The term debenture has its source fr

Find out total amount of sales, Imagine Joy is the sales manager in a compu...

Imagine Joy is the sales manager in a computer retail company and has summarized for each sales transaction the following information: Sales person Date of sales Uni

Analysis on capital budgeting npv or eaa, As the Chief Financial Officer fo...

As the Chief Financial Officer for the wholly Australian owned, Australian Stock Exchange listed company, Toy Show Ltd., an importer and manufacturer of a range of quality children

Intro to finance, discuss the flow of fund in an open economy

discuss the flow of fund in an open economy

Finance, the real risk-free rate of interest is 4%. inflation is expected t...

the real risk-free rate of interest is 4%. inflation is expected to be 2% this year and 4% during the next 2 years. assume that the maturity risk premium is zero. what is the yield

Solutions to agency problem, Solutions to agency problem The bondholde...

Solutions to agency problem The bondholders might receive the following procedures to protect themselves from the process of the shareholders that might dilute the value of th

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