Which of the Following Statements Is CORRECT

question 81

Multiple Choice

Which of the following statements is CORRECT?

• A) If inflation is expected to increase in the future,and if the maturity risk premium (MRP)is greater than zero,then the Treasury yield curve will have an upward slope.
• B) If the maturity risk premium (MRP)is greater than zero,then the yield curve must have an upward slope.
• C) Because long-term bonds are riskier than short-term bonds,yields on long-term Treasury bonds will always be higher than yields on short-term T-bonds.
• D) If the maturity risk premium (MRP)equals zero,the yield curve must be flat.
• E) The yield curve can never be downward sloping.

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Definitions:

Denominator Activity

The level of activity used to compute a predetermined overhead rate, representing the total amount of absorption base that is expected to be utilized.

Efficiency Variances

Refers to the differences between the actual and standard costs attributable to efficiency in using resources, often analyzed in labor and variable overhead.

Predetermined Overhead Rate

An estimated rate used to assign manufacturing overhead costs to individual units of production, based on a chosen activity base.

Denominator Level

In cost accounting, it refers to the standard quantity or activity used in calculating the predetermined overhead rate.