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A reason why interest rates are different for different loan terms is that the pool of borrowers or lenders for a short-term have different characteristics
A reason why interest rates are different for different loan terms is that the pool of borrowers or lenders for a short-term have different characteristics and investment motivations than the pool of borrowers or lenders for a longer-term. This explanation is called:
a) Opportunity cost theory b) Liquidity preference theory c) Preferred habitat theory d) Market segmentation theory e) Expectations theory
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