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

Describe the transaction structure-financing, Description of the deal, anal...

Description of the deal, analysis of abnormal returns & premium (a)  Describe the transaction structure, mode of payment, and financing.  (b) Give your comment/assessment of

Debentures and bonds, how can debentures be explained in class in term of g...

how can debentures be explained in class in term of game, role play etc....?

What is the process of investing in securities, What is the Process of Inve...

What is the Process of Investing in Securities ? There are several process of investing in securities:- (1) Finding a Broker (2) Selection of Brokers (3) Opening an Account w

Compute appropriate net present value, Imagine Joy is the project coordinat...

Imagine Joy is the project coordinator in a company where four projects are running concurrently. He's employed you as the senior business analyst to perform some financial calcula

What do you mean listing of securities, What do you mean listing of securit...

What do you mean listing of securities? Explain. Listing of Securities: Listing means admission of the securities to dealings on a recognized stock exchange. Securities of an

Funding venture capital, Funding Venture Capital Whenever a company's ...

Funding Venture Capital Whenever a company's directors look for support from a venture capital institution, so they must distinguish that as: a) The institution will would

Clientele effect theory, Clientele Effect Theory Advance via Richardso...

Clientele Effect Theory Advance via Richardson Petit in 1977.It stated such different types of groups of shareholders or clientele have different type of preferences for divid

Cash and marketable securities management, Cash and Marketable Securities M...

Cash and Marketable Securities Management The management of marketable and cash securities is single of the key areas of working capital management. Because cash and marketabl

State the determinants of return, State the Determinants of Return T...

State the Determinants of Return Three major determinants of the rate of return expected by investor are: (i) Time preference risk-free real rate. (ii) Expected rate o

Inevestments, 1) What happens to the portfolio standard deviations as the i...

1) What happens to the portfolio standard deviations as the investor substitutes the foreign securities for the U.S securities? What combination of U.S and Japanese stock minimizes

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