The Rate, Interpreted to Be the Incremental Return for Extending

question 18

Multiple Choice

The rate, interpreted to be the incremental return for extending the time-to-maturity of an investment for an additional time period, is the:

• A) add-on rate.
• B) forward rate.
• C) yield-to-maturity.

---

Definitions:

Safety Inventory

Inventory kept as a buffer against forecasted demand and supply variability to prevent stockouts.

Forecasted Demand

The estimated amount of product or service that will be bought by customers in a future period, often used for planning in business operations.

Postponement

A supply chain strategy that delays the final production or distribution of a product until customer orders are received to minimize inventory and forecast error costs.

Product Differentiation

The method of making a product or service stand out from competitors in the marketplace to appeal more effectively to a specific target audience.