If the Activity Level Decreases, What Happens to the Total

question 153

Multiple Choice

If the activity level decreases, what happens to the total fixed cost?

• A)It remains the same.
• B)It decreases.
• C)It increases.
• D)It depends on how much the activity level increases.

---

Definitions:

Promised Yield

The return that a bond issuer indicates to the bondholder that will be received, factoring in the interest rate and the term.

Cash Flow Matching

A strategy of investing in such a way that cash flows from the investments will meet the investor's outflows when needed, often used in pension planning and managing corporate finances.

Active Bond Portfolio

A portfolio of bonds managed with the intention of outperforming the market through various strategies, such as sector rotation and duration management.

Financial Institutions

Entities that provide financial services, including banks, insurance companies, pension funds, brokerage firms, and others.