The Term Structure of Interest Rates Refers To

question 32

Multiple Choice

The term structure of interest rates refers to:

• A)the relationships between interest rates and term to maturity.
• B)the idea that any long-term rate is the average of expected future short-term rates.
• C)a general expectation of higher future interest rates.
• D)the idea that the terms of the bond may change as time to maturity changes.
• E)More than one of the above are true

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Definitions:

Variable Overhead Cost

Costs that vary with the level of production output, such as supplies and utilities for manufacture.

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of goods sold, excluding fixed overhead costs.

Absorption Costing

A cost accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overhead - as part of the cost of a finished product.

Net Income

A company's overall profit after subtracting expenses and taxes from its revenue.