A Treasury Bond Due in One Year Has a Yield

question 35

Multiple Choice

A Treasury bond due in one year has a yield of 5.7%; a Treasury bond due in 5 years has a yield of 6.2%. A bond issued by Ford due in 5 years has a yield of 7.5%; a bond issued by Shell Oil due in one year has a yield of 6.5%. The default risk premiums on the bonds issued by Shell and Ford, respectively, are

• A) 1.0% and 1.2%.
• B) 0.7% and 1.5%.
• C) 1.2% and 1.0%.
• D) 0.8% and 1.3%.
• E) None of the options are correct.

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Definitions:

Achievement Need

The psychological drive to excel, achieve in terms of set standards, and strive for success.

Situational Determinants

Situational determinants are external factors that influence an individual's behavior, varying depending on the context or environment.

Social Bonds

Connections among individuals in a society that foster trust, cooperation, and collective action.

Associate

To connect or link in one's mind; to relate one idea or concept with another.