Which of the Following Is a Basic Component That Affects

question 159

Multiple Choice

Which of the following is a basic component that affects the slope of the term structure of interest rates?

• A) Inflation premium.
• B) Liquidity premium.
• C) Real rate of interest.
• D) Default risk premium.
• E) Taxability premium.

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Definitions:

Journal Entry

A record of a business transaction in the accounting journal that shows the accounts and amounts debited and credited.

Merchandise Inventory

Goods a business has acquired to sell to customers but has not yet sold.

Cash Equivalent

Short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Certificate of Deposit

A savings certificate issued by a bank to a person depositing money for a specified length of time, typically earning a fixed interest rate.