Assume That Interest Rates on 20-Year Treasury and Corporate Bonds $$\begin{array} { l l } \text { T-bond } = 7.72 \% & \mathrm {~A} = 9.64 \% \\\mathrm { AAA } = 8.72 \% & \mathrm { BBB } = 10.18 \%\end{array}$$

question 76

Multiple Choice

Assume that interest rates on 20-year Treasury and corporate bonds with different ratings, all of which are noncallable, are as follows: $$\begin{array} { l l } \text { T-bond } = 7.72 \% & \mathrm {~A} = 9.64 \% \\\mathrm { AAA } = 8.72 \% & \mathrm { BBB } = 10.18 \%\end{array}$$ The differences in rates among these issues were most probably caused primarily by:

• A) Real risk-free rate differences.
• B) Tax effects.
• C) Default and liquidity risk differences.
• D) Maturity risk differences.
• E) Inflation differences.

Understand the concept of minimum acceptable price for a firm in both short run and long run.

Analyze profit maximization output through graphical representations.

Identify and label long-run and short-run supply curves.

Determine firm behavior based on different price levels in the short and long run.

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The degree to which something is pertinent or significantly related to an individual's life or interests.

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involves the processes by which the information stored in memory is retrieved.

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The quality of being clearly defined or specific, often used to describe the precise nature of something such as an instruction, task, or condition.

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A fixed, over-generalized belief about a particular group or class of people, often leading to prejudgment.