If Shorter-Term Securities Have Higher Annualized Yields Than Longer-Term Securities

question 25

Multiple Choice

If shorter-term securities have higher annualized yields than longer-term securities, the yield curve

• A)is horizontal.
• B)is upward sloping.
• C)is downward sloping.
• D)cannot be determined unless we know additional information (such as the level of market interest rates).

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Definitions:

Stockholders' Equity

The remaining interest in a corporation's assets after all liabilities are subtracted, which signifies ownership.

Accounts Receivable

Accounts receivable represents money owed to a business by its customers for goods or services delivered but not yet paid for.

Business Activities

Various actions undertaken by a company to operate and manage its business, including operating, investing, and financing activities.

Operating

Pertains to the day-to-day activities involved in managing a business, including production, sales, and administration.