When Yield Curves Are Downward Sloping

question 112

Multiple Choice

When yield curves are downward sloping

• A)long-term interest rates are above short-term interest rates.
• B)short-term interest rates are above long-term interest rates.
• C)short-term interest rates are about the same as long-term interest rates.
• D)medium-term interest rates are above both short-term and long-term interest rates.

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Definitions:

Variable Selling Expense

Variable selling expense refers to costs that fluctuate with the volume of sales, such as commissions and shipping charges.

Traditional Format Income Statement

A financial statement format that separates operating activities from non-operating activities to reveal gross profit, operating income, and net income.

Contribution Format Income Statement

An income statement format that separates variable and fixed costs, making it easier to see the contribution margin.

Contribution Margin

The revenue remaining after deducting variable costs, which contributes to covering fixed costs and generating profit.