If Interest Rates Move Lower After a Treasury Note Is

question 105

Multiple Choice

If interest rates move lower after a Treasury note is issued,a holder selling it into the secondary markets:

• A) receives a capital gain.
• B) receives a capital loss.
• C) receives the original price, as short-term markets are not so affected by interest rate movements.
• D) receives a higher yield owing to the time elapsed.

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Definitions:

Period Costs

Expenses that are not directly tied to product production, such as sales and administration expenses, and are charged to the period incurred.

Selling Expenses

Costs associated with the distribution, marketing, and sale of a product or service, excluding direct production costs.

Direct Labor

The cost of wages for labor directly involved in the production of goods or delivery of services.

Inventoriable

Costs or goods that are considered inventory and can be accounted for as assets until they are sold or used.