Observing the Following Term Structure; a US Treasury Bond Maturing

question 19

Multiple Choice

Observing the following term structure; a US treasury bond maturing in 5 years has a yield of 6% while US Treasury bond maturing in 3 years has a yield of 8%; what is the expected 2 year rate,3 years from now?

• A) 3.07%
• B) 8.07%
• C) 2.36%
• D) 4.35%

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Definitions:

U.S. GAAP

United States Generally Accepted Accounting Principles, a framework of accounting standards, procedures, and rules used by companies to compile their financial statements in the U.S.

Operating Segment Disclosure

The requirement for companies to report financial and descriptive information about their principal operating segments, enhancing the transparency of financial performance for stakeholders.

LIFO Method

Last-In, First-Out method; an inventory valuation technique where the goods or materials purchased last are assumed to be the first ones used or sold.

Cost of Goods Sold

The total cost associated with making or buying the goods that a company has sold during a particular period.