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.

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Definitions:

Absorption Costing

An approach in accounting that factors in every production cost, from raw materials and direct labor to both kinds of manufacturing overheads, variable and fixed, into the price of a product.

Net Operating Income

The profit generated from a company's core business operations, excluding expenses and revenues from non-operating activities.

LIFO

Last In, First Out, an inventory valuation method where the most recently produced items are recorded as sold first.

Absorption Costing

A method of accounting in which all the costs associated with the production of a product are absorbed by that product. This includes direct costs like materials and labor, as well as fixed and variable overhead.