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:

Temporary Accounts

Accounts that are closed at the end of each accounting period, including revenue, expense, and withdrawal accounts, used to track transactions for a particular period.