Which of the Following Statements Is True

question 59

Multiple Choice

Which of the following statements is true?

• A)The variable spread between a lending rate and a borrowing rate, or between any two interest rates or prices is called basis risk.
• B)The variable spread between a lending rate and a borrowing rate, or between any two interest rates or prices is called spread risk.
• C)The variable spread between a lending rate and a borrowing rate, or between any two interest rates or prices is called interest spread risk.
• D)The variable spread between a lending rate and a borrowing rate, or between any two interest rates or prices is called funding risk

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Definitions:

Operating Activities

Day-to-day actions that are related to producing and delivering a company's primary goods and services, reflected in its income statement.

Investing Activity

Financial actions that involve purchasing or selling long-term assets and other investments, affecting the capital structure of an organization.

Financing Activity

Transactions and events that involve raising capital and repaying investors, including issuing equity, obtaining loans, and repaying debt, as part of the cash flow statement.

Statement of Cash Flows

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, segregating the analysis into operating, investing, and financing activities.