Which of the Following Is NOT a Reason That Interest

question 128

Multiple Choice

Which of the following is NOT a reason that interest rates remained low despite high budget deficits following the financial crisis?

• A) increased demand for U.S. government bonds
• B) the perceived riskiness of alternative investments such as stocks
• C) low interest rates on corporate bonds and similar short-term assets
• D) increases in expected inflation

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Definitions:

Straight-line Method

A depreciation method that allocates an equal amount of the asset's cost to each year of its useful life.

Market Rate

The prevailing interest rate available in the overall financial market for securities or loans of a similar risk and maturity profile.

Annual Interest

The total amount of interest payable on a loan, bond, or other financial instrument over the course of a year.

Market Rate

The current interest rate offered in the market for instruments with similar risk and maturity levels.