According to the Expectations Theory of the Term Structure

question 3

Multiple Choice

According to the expectations theory of the term structure

• A)the interest rate on long-term bonds will exceed the average of short-term interest rates that people expect to occur over the life of the long-term bonds,because of their preference for short-term securities.
• B)interest rates on bonds of different maturities move together over time.
• C)buyers of bonds prefer short-term to long-term bonds.
• D)buyers require an additional incentive to hold long-term bonds.

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Definitions:

Indirect Cost

Expenses that are not directly attributable to a specific product or service, such as administrative and facility costs.

Direct Cost

Expenses that can be directly traced to the production of a specific good or service, such as materials and labor.

Period Cost

Costs that are expensed in the period in which they are incurred; often administrative or selling expenses, not directly tied to production.

Product Cost

The total costs incurred to create a product, including direct materials, direct labor, and manufacturing overhead expenses.