The Term Structure of Interest Rates

question 18

Multiple Choice

The term structure of interest rates

• A) changes daily to reflect current competitive conditions in the money and capital markets.
• B) plots returns for securities of different risk.
• C) shows the relative interest spread between bonds with different risk ratings such as AAA, AA, A, BBB, etc.
• D) depicts interest rates for T-bills over the last year.

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Definitions:

Short-Term Debt

Financial obligations that are due for repayment within one year.

Return On Total Assets

A financial ratio that measures a company's profitability in relation to its total assets, indicating how efficiently a company uses its assets to generate profit.

Long-Term Debt

Debt obligations of a business that are due after more than one year, used to finance operations or major purchases.

Net Profit Margin Percentage

A profitability ratio that measures the percentage of net income generated from total revenue.