Which of the Following Statements Is True

question 3

Multiple Choice

Which of the following statements is true?

• A)Interest rates always rise before recessions.
• B)Treasury bond yields are always higher than Treasury bill yields.
• C)Default risk premiums vary inversely with economic activity.
• D)Municipal bond yields are usually higher than similar risk corporate yields.

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Definitions:

Poisson Model

A statistical model that predicts the probability of a given number of events happening in a fixed interval of time or space when these events occur with a known constant mean rate and independently of the time since the last event.

Probability

The quantification of the probability that an event will take place, expressed as a number from 0 to 1, with 0 signifying that the event cannot occur and 1 signifying absolute certainty of occurrence.

Defects

Imperfections or faults in a product, process, or system that deviate from desired specifications.

Fabric

A material made by weaving, knitting, pressing, or bonding that may be used in the production of clothing, household items, and other goods.