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Hello sir, i wanna ask a ques.
in market segmentation, why lower yield of shorter maturity implies that short term securities receive higher demand, resulting in higher prices and lower yield thereof?
The yield demanded for short-term investments depends on the attitude of those investors who prefer short-term investments.
If they are prepared to accept a lower yield then automatically the market value will be higher because always the market value is the present value of the future receipts. Discounting at a lower rate gives a higher market value.
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