If the Current Yields on Three-Year Corporate Bonds Are 7

question 22

Multiple Choice

If the current yields on three-year corporate bonds are 7% per annum and on the same day the yield in the futures market for comparable bonds is 6.50% per annum,the interest rate difference is due to:

• A) business risk.
• B) basis risk.
• C) credit risk.
• D) financial risk.

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Definitions:

Assimilation

A cognitive process in Jean Piaget's theory where individuals integrate new information into existing schemas or frameworks of understanding.

Feeling of Meaning

The subjective experience or sensation that one's life or circumstances have purpose and significance.

Heredity

The passing of traits from parents to offspring through genes, influencing characteristics such as height, eye color, and susceptibility to certain diseases.

Environment

The surrounding physical, biological and socio-economic conditions in which an organism or community lives.