The Average Yield Spread Based on Promised Yield on Aaa

question 49

Multiple Choice

The average yield spread based on promised yield on Aaa bonds rated by Moody's and the yield on Treasuries is about:

• A)1%.
• B)2%.
• C)3%.
• D)4%.

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Definitions:

Fixed Costs

Expenses that do not fluctuate with changes in production level or sales volume, such as rent, salaries, and insurance.

Operating Profit

Income derived from normal business operations after subtracting operating expenses and cost of goods sold, also known as operating income.

Capacity

The maximum amount that something can contain or produce.

Variable Costs

Costs that change in proportion to the amount of goods produced or the volume of sales, like labor and materials.