A Treasury Bond Due in One Year Has a Yield

question 41

Multiple Choice

A Treasury bond due in one year has a yield of 4.6%; a Treasury bond due in five years has a yield of 5.6%. A bond issued by Lucent Technologies due in five years has a yield of 8.9%; a bond issued by Exxon due in one year has a yield of 6.2%. The default risk premiums on the bonds issued by Exxon and Lucent Technologies, respectively, are

• A) 1.6% and 3.3%.
• B) 0.5% and 0.7%.
• C) 3.3% and 1.6%.
• D) 0.7% and 0.5%.
• E) None of the options are correct.

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Definitions:

Cognitive Appraisal Theory

A psychological theory that explains how individuals evaluate and interpret different situations and stressors, leading to various emotional and behavioral responses based on their assessments.

Primary Appraisal

The initial evaluation process where an individual assesses the significance of a stressor as irrelevant, benign-positive, or stressful.

Secondary Appraisal

This part of the stress-coping process involves evaluating one's resources and options for dealing with a potential stressor after its initial assessment.

Good Mood

A positive emotional state characterized by feelings of joy, contentment, and well-being.