An Aggregate Purchase by Investors of Low-Yield Instruments in Favor

question 52

Multiple Choice

An aggregate purchase by investors of low-yield instruments in favor of high-yield instruments places ____ pressure on the yields of low-yield securities and ____ on the yields of high-yield securities.

• A)upward; upward
• B)downward; downward
• C)upward; downward
• D)downward; upward

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Definitions:

Open Account

A credit arrangement where goods or services are sold without immediate payment, allowing the buyer to pay at a later scheduled date.

EOQ Model

The Economic Order Quantity model is used to determine the optimal order size to minimize the sum of ordering, carrying, and stockout costs.

Reorder Points

The inventory level at which a new order should be placed to replenish stock before it runs out, avoiding stockouts and production delays.

Carrying Costs

The complete expense associated with keeping inventory, encompassing storage fees, insurance, and the cost of missed opportunities.