As GDP Rises The

question 119

Multiple Choice

As GDP rises the:

• A) Risk spread and term spread decrease
• B) Risk spread and term spread increase
• C) Risk spread increases and the term spread decreases
• D) Risk spread decreases and the term spread increases

---

Definitions:

Present Value

The current value of a future amount of money or stream of cash flows, given a specified rate of return.

Rate Of Return

The increase or decrease in value of an investment within a set timeframe, represented as a percentage of the investment's starting price.

Discount Rate

The interest rate charged by central banks on loans they give to commercial banks or the rate used to discount future cash flows to their present value.

Present Value

The worth in present terms of a lump sum or cash flows anticipated in the future, using a predetermined rate of return for the calculation.