The Gap Between the Yield on a Corporate Bond and the Yield

question 87

Multiple Choice

The gap between the yield on a corporate bond and the yield on a U.S. Treasury bond of the same maturity represents

• A)the market's evaluation of the likelihood of future inflation.
• B)the market's evaluation of the likelihood of default on the bond.
• C)the market's evaluation of the greater liquidity of the corporate bond.
• D)evidence against the efficient markets hypothesis.

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Definitions:

Level Of Output

The total quantity of goods or services produced by a firm or economy at a given time, often analyzed to assess economic performance or business productivity.

Graph

A visual representation of data, which showcases the relationship between two or more variables through lines, bars, or other symbols.

Difference

The result of subtracting one value from another, often used in various contexts like mathematics, statistics, and economics.

X-Inefficiency

The difference between efficient behavior of businesses in a competitive market and their actual behavior due to a lack of competitive pressure.