The Following Table Shows Information About Bonds Issued by Governments

question 183

Essay

The following table shows information about bonds issued by governments and companies in Canada, sorted by increasing maturity. (Source: Globe and Mail, retrieved 12 August, 2010, http://www.globeinvestor.com/servlet/Page/document/v5/data/bonds/.) Does this information support the theory that less risky bonds yield lower returns? Explain your answer.

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Definitions:

Direct Materials Budget

A detailed plan showing the amount of raw materials that must be purchased to fulfill the production budget and to provide for adequate inventories.

Direct Labor Budget

A detailed plan that shows the direct labor-hours required to fulfill the production budget.

Production Budget

An estimate of the total amount of production, in units, that a company needs to meet its sales goals and inventory policies.

Master Budget

A number of separate but interdependent budgets that formally lay out the company’s sales, production, and financial goals and that culminates in a cash budget, budgeted income statement, and budgeted balance sheet.