Given That Short-Term Interest Rates Typically Fluctuate Less Than Long-Term

question 102

Multiple Choice

Given that short-term interest rates typically fluctuate less than long-term rates,interest rate risk is least for

• A) treasury bills.
• B) common stock.
• C) long-term government bonds.
• D) medium-term corporate bonds.

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Definitions:

Permanent/Temporary

Describes accounts that are either not closed at the end of the accounting period (permanent) or are closed and reset (temporary).

Normal Balance

The side (debit or credit) of an account that is increased. For assets and expenses, it is the debit side; for liabilities, equity, and revenues, it is the credit side.

Financial Statement

A financial statement is a formal record of the financial activities and position of a business, person, or other entity, detailing earnings, expenditures, assets, liabilities, and equity at a specific point in time.

Permanent/Temporary

Classification of accounts where permanent accounts represent balance sheet items carried over multiple periods, and temporary accounts are income statement items closed at the end of each period.