Which of the Following Best Explains Why the Long-Term Interest

question 18

Multiple Choice

Which of the following best explains why the long-term interest rate will generally change by less than 1% when the short-term interest rate changes by 1%?

• A)The mathematical calculations are more difficult for analysts in the case of long-term bonds.
• B)Long-term rates are always lower than short-term rates, so there is less room for them to change.
• C)Financial market participants will not expect this increase in the short-term interest rate to persist fully in the future.
• D)Financial markets are often affected by bubbles and fads.
• E) none of the above

Calculate and record the initial cost of purchasing stock, including related fees.

Understand the accounting treatment for bond purchases and sales, including the impact of accrued interest.

Recognize how an investor's share of periodic net income or loss from an investee is recorded under the equity method.

Describe the differences between trading securities, available-for-sale securities, and held-to-maturity securities.

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