The Risk Structure of Interest Rates Says

question 60

Multiple Choice

The risk structure of interest rates says:

• A) the interest rates on a variety of bonds will move independently of each other.
• B) lower rated bonds will have higher yields.
• C) U.S. Treasury bond yields always change by more than other bonds.
• D) interest rates only compensate for risk during recessions.

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Definitions:

Planning Budget

A budget prepared for a planned level of activity; it is used for planning and control purposes within an organization.

Administrative Expenses

Expenses that are not directly related to the production of goods or services, including salaries of administrative staff, rent, and utilities.

Activity Variance

The difference between budgeted and actual activity levels, used in managerial accounting to monitor performance and control costs.

Net Operating Income

The income generated from normal business operations after subtracting operating expenses but before interest and taxes.