A Dam Is Thicker at the Bottom Than at the Top

question 99

Multiple Choice

A dam is thicker at the bottom than at the top because

• A)water is denser at deeper levels.
• B)water pressure is greater at deeper levels.
• C)water is cooler at deeper levels.
• D)dams look better.
• E)none of the above

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Definitions:

Interest Rates

The cost of borrowing money or the return on invested capital, expressed as a percentage rate over a period of time, typically one year.

Zero-Coupon Bond

A bond that does not pay periodic interest but is issued at a discount from its face value, and its return comes from the difference between the purchase price and the face value paid at maturity.

Investment Horizon

Investment Horizon denotes the period an investor expects to hold an investment before taking any return out of it.

Interest Rate Risk

The risk that the value of an investment will decrease due to a rise in interest rates, affecting especially interest-bearing assets like bonds.