Which of the Following Statement Completions Is CORRECT? If the Yield

question 38

Multiple Choice

Which of the following statement completions is CORRECT? If the yield curve is upward sloping, then the marketable securities held in a firm's portfolio, assumed to be held for emergencies, should

• A) consist mainly of short-term securities because they pay higher rates.
• B) consist mainly of U.S.Treasury securities to minimize interest rate risk.
• C) consist mainly of short-term securities to minimize interest rate risk.
• D) be balanced between long- and short-term securities to minimize the adverse effects of either an upward or a downward trend in interest rates.
• E) consist mainly of long-term securities because they pay higher rates.

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Definitions:

Chain Migration

A social process by which immigrants from a particular town follow others from that town to a particular city or neighborhood, whether in their home country or abroad.

Extrinsic Motivation

The drive to perform activities for external rewards or to avoid punishment, rather than for intrinsic pleasure or interest.

Threats of Punishment

A behavioral strategy that involves warning of negative consequences to discourage undesirable actions or behaviors.

Promised Rewards

Incentives that are offered in advance to motivate individuals to engage in a specific behavior or achieve a certain outcome.