An Upward-Sloping Yield Curve That Indicates Generally Cheaper Short-Term Borrowing

question 26

Multiple Choice

An upward-sloping yield curve that indicates generally cheaper short-term borrowing costs than long-term borrowing costs is called

• A) normal yield curve.
• B) inverted yield curve.
• C) flat yield curve.
• D) none of the above.

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Definitions:

Ordinary Repairs

Expenditures to maintain an asset in its normal operating condition without significantly extending its useful life or altering its capacity.

Double-declining-balance Method

An accelerated method of depreciation that counts as an expense twice the straight-line depreciation rate for the declining book value of the asset each year.

Straight-line Method

A method of depreciation that distributes a consistent depreciation expense for an asset throughout its lifetime.

Salvage Value

The estimated residual value of an asset at the end of its useful life, determining how much the asset can be sold for after it is no longer useful for its intended purpose.