To Reduce Interest Rate Risk and Smooth Out Interest Rate

question 116

Multiple Choice

To reduce interest rate risk and smooth out interest rate fluctuations when purchasing certificates of deposit (CDs) you can engage in

• A)CD laddering.
• B)CD layering.
• C)grace period management.
• D)money-market arbitrage.

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Definitions:

Histogram

A graphical representation of data using bars of different heights to show the frequency of data in adjacent intervals.

Distribution

In statistics, it describes how values of a variable are spread or distributed across different levels.

First Quartile

The first quartile is a statistical measure that divides a data set into four equal parts, representing the value below which 25% of the data falls.

Hours

Units of time equivalent to 60 minutes, commonly used to measure durations and periods of the day.