Suppose the interest rates on one-, five-, and ten-year US Treasury bonds are currently 3%, 6%, and 6%. respectively. Investor A chooses to hold only one-year bonds and investor B is inerrant with grad to holding five- and ten-year bonds. Which theories best explain the behavior of Investors A and B?

A. Both Investors A and B exhibit preferences that are consistent with expectations theory.
B. Investor A's preferences are best explained by the liquidity premium theory, while Investor B's preferences are more consistent with the segmented markets Theory
C. Investor A's preferences are best explained by the segmented markets theory, while Investor B's preferences are more consistent with the expectations theory.
D. Both Investors A and B exhibit preferences that are consistent with the segmented markets theory.

C. Investor A's preferences are best explained by the segmented markets theory, while Investor B's preferences are more consistent with the expectations theory.

Explanation:

Segmented market theory states that long and short-term interest rates are not related to each other.

Expectations theory talks about what short-term interest rates will be in the future based on current long-term interest rates.

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the answer is "b.the increased supply will create a surplus. "

the essential thought behind price controls is straightforward - utilize the power of law to modify the equilibrium of a market. for instance, the legislature may choose that the steel business needs to survive, and in this way pass a law to set a value floor on steel. this implies all steel sold must offer at or over the floor value, which must be set over the equilibrium cost for it to have any impact. the switch could likewise happen - the administration can choose that steel is excessively costly and set a value roof underneath its equilibrium value, with the goal that all steel must be sold at or beneath that ceiling.