Use the Information for the Question(s)below

question 85

Multiple Choice

Use the information for the question(s) below.
-Why are the interest rates of U.S.Treasury notes less than the interest rates of equivalent corporate bonds?

• A)The U.S.government has a high credit spread.
• B)There is significant risk that the U.S.government will default.
• C)U.S.Treasury securities are widely regarded to be risk-free.
• D)U.S.Treasury securities are generally used to determine interest rates.

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Definitions:

Elastic

Describes a situation where the demand or supply for a good or service significantly changes in response to changes in price.

Pure Competition

A market structure characterized by a large number of buyers and sellers, uniform products, and free entry and exit, leading to price taking behaviour.

Excess Capacity

A situation where a firm is producing at a level less than its potential maximum output, indicating underutilization of resources.

Monopolistically Competitive

An economic scenario where multiple companies offer products that are alike but not exactly the same, providing them with a certain level of influence over the market.