Currently,a Three-Month Treasury Bill Has a Yield of 5% While

question 40

Multiple Choice

Currently,a three-month Treasury bill has a yield of 5% while the yield on a ten-year Treasury bond is 4.7%.What is the risk premium of the typical A-rated ten-year corporate bond with a yield of 5.5%?

• A) 0.5%
• B) 0.8%
• C) 1.17%
• D) 5.5%

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Definitions:

Equilibrium Level

A condition where the supply and demand in the market are equal, leading to steady prices and amounts.

Supply Curve

A visual chart that illustrates how the price of a product correlates with the amount suppliers are prepared to manufacture and sell.

Cost Of Production

The total expense incurred in manufacturing a product or providing a service, including labor, materials, and overhead.

Consumer Taste

The preferences and expectations of consumers regarding products and services, which can influence their buying behavior.