Use the Table for the Question(s)below

question 8

Multiple Choice

Use the table for the question(s) below.
Consider the following zero-coupon yields on default-free securities:
-The forward rate for year 4 (the forward rate quoted today for an investment that begins in three years and matures in four years) is closest to:

• A)4.5%.
• B)4.6%.
• C)4.4%.
• D)5.0%.

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Definitions:

Absorption Costing

An accounting method that assigns all manufacturing costs, both variable and fixed, to products, thereby impacting the inventory valuation on the balance sheet.

Net Operating Income

The profit a company makes from its operations, calculated as total revenue minus operating expenses, excluding taxes and interest.

Variable Costing

An accounting method that only includes variable production costs—direct materials, direct labor, and variable manufacturing overhead—in product costs.

Absorption Costing

A product costing technique that adds up all manufacturing expenses — direct materials, direct labor, variable, and fixed overheads — into the comprehensive cost of the product.