Suppose That a Five-Year Treasury Bond Pays 2

question 22

Multiple Choice

Suppose that a five-year Treasury bond pays 2.5 percent and a five-year corporate bond pays 8.5 percent, then what is the interest rate spread on this particular corporate bond?

• A)5 percent
• B)6 percent
• C)7.5 percent
• D)9.0 percent

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Definitions:

Beet Fiber

A byproduct of sugar beet processing, often used as livestock feed or as a raw material in the production of biodegradable products.

Industrial Fiber

Man-made or natural fibers that are primarily used in manufacturing and industrial applications due to their strength and durability.

Refined Sugar

Sugar that has undergone processing and purification to remove impurities and color, resulting in white, granulated sugar.

Constrained Machine

A machine or resource within a manufacturing process that limits the overall output due to its capacity or availability.