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:

Average Product

The output produced per unit of input, calculated by dividing total product by the quantity of input used in its production.

Labor

The human effort, both physical and mental, used in the production of goods and services.

Marginal Product

The additional output that is produced by adding one more unit of a specific input, keeping all other inputs constant.

Yards Raked

Refers to the number of yards that have been cleared of leaves or debris, typically a measure of work done in landscaping or garden maintenance.