We Would Expect the Relationship Between the Risk Spread on Baa

question 117

Multiple Choice

We would expect the relationship between the risk spread on Baa bonds and U.S. Treasury securities of similar maturities to:

• A) Vary directly with economic growth
• B) Show no variation over the business cycle
• C) Vary inversely with economic growth
• D) Breakdown with economic growth

---

Definitions:

Longevity

A long duration of life; lasting a long time.

Profit Sharing

A system by which employees receive a share of the profits of a business enterprise.

Pension Plan

A retirement plan that requires an employer to contribute to a pool of funds set aside for an employee's future benefit.

Bereavement Time

Time that an employee can take off when a family member or very close friend dies.