Which One of the Following Statements Is Correct

question 68

Multiple Choice

Which one of the following statements is correct?

• A)The yield curve relates time to maturity to interest rates on zero coupon bonds.
• B)The yield curve is based on Treasury bill yields.
• C)The term structure of interest rates is based on default-free, pure discount securities.
• D)The term structure of interest rates is based on default-free, coupon bonds.
• E)The yield curve ignores default risk while the term structure includes a default risk premium.

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Definitions:

Partner Bonus

A financial incentive provided to a partner within a business, often based on the firm's profitability, individual performance, or both.

Fair Market Value

The price that property would sell for on the open market, between willing buyers and sellers under no pressure to act.

Capital Balances

The amount of money that the owners or shareholders have invested in the company.

Salary Allowances

Additional benefits or compensations given to employees over and above their regular salary, which could include housing, transportation, or medical allowances.