Which of the Following Statement Completions Is CORRECT? If the Yield

question 80

Multiple Choice

Which of the following statement completions is CORRECT? If the yield curve is upward sloping, then the marketable securities held in a firm's portfolio, assumed to be held for emergencies, should

• A) consist mainly of short-term securities because they pay higher rates.
• B) consist mainly of u.s. treasury securities to minimize interest rate risk.
• C) consist mainly of short-term securities to minimize interest rate risk.
• D) be balanced between long- and short-term securities to minimize the adverse effects of either an upward or a downward trend in interest rates.
• E) consist mainly of long-term securities because they pay higher rates.

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Definitions:

Import Tariff

A tax imposed by a government on goods and services imported into its country to protect domestic industries from foreign competition.

Supply and Demand

Economic model of price determination in a market, showing the relationship between the quantity of goods that producers wish to sell at various prices and the quantity consumers wish to buy.

Specific Tax

A fixed amount taxed per unit of a good or service, as opposed to a percentage of the price.

Fraction

A numerical quantity that is not a whole number, represents a part of a whole, typically written with a numerator and a denominator separated by a slash.