If a Significant Change Is Noted in the Yield of a T-Bill,the

question 26

Multiple Choice

If a significant change is noted in the yield of a T-bill,the change is most likely attributable to

• A) A downturn in the economy.
• B) A static economy.
• C) A change in the expected rate of inflation.
• D) A change in the real rate of interest.
• E) A change in risk aversion.

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity and short-term financial health of the business.

Discount Rate

The interest rate used to discount future cash flows to their present value.

Salvage Value

The assessed salvage value of an asset at the close of its lifespan.

Pretax Return

The income earned by a company before taxes are deducted.