If the Present 1-Year Rate Is 4% and the Expected

question 90

Multiple Choice

If the present 1-year rate is 4% and the expected 1-year rate is 6%, then according to the expectations theory, the 2-year rate is approximately which of these?

• A)6%
• B)Unknown
• C)5%
• D)4%

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Definitions:

Break-even Point

Break-even Point is the financial analysis term that indicates when total costs and total revenues are exactly equal, resulting in neither profit nor loss.

Mixed Costs

Costs with both variable and fixed characteristics, sometimes called semivariable or semi-fixed costs.

Variable Components

Parts of a cost or expense that change in proportion with changes in the level of business activity or production volume.

Fixed Components

The elements of a business's costs that remain constant regardless of the level of production or sales activity.