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

question 14

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

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Definitions:

Variable Manufacturing Overhead

The costs that vary with production volume, such as indirect materials, utilities, and labor involved in the manufacturing process.

Machine-Hour

A measure of production output or activity based on the number of hours a machine is operated.

Fixed Manufacturing Overhead

A consistent cost incurred during manufacturing that does not vary with the level of production, such as salaries of managers or rent.

Cooling Coil

A component used in refrigeration and air conditioning systems to transfer heat and cool down air or liquids passing through it.