During a "Flight to Quality

question 106

Multiple Choice

During a "flight to quality"

• A)the spread between Treasury bonds and Baa bonds increases.
• B)the spread between Treasury bonds and Baa bonds decreases.
• C)the spread between Treasury bonds and Baa bonds is not affected.
• D)the change in the spread between Treasury bonds and Baa bonds cannot be predicted.

---

Definitions:

Double-Declining-Balance

A depreciation technique that increases the standard rate of depreciation twofold, thus diminishing an asset's value at a faster pace.

Units-of-Activity

A depreciation method that allocates the cost of an asset over its useful life based on the number of units it produces or hours it operates.

Straight-Line Depreciation

A method of calculating the depreciation of an asset by evenly spreading its cost over its useful life.

Residual Value

The estimated remaining value of an asset at the end of its useful life, often used in calculating depreciation expenses.