If You Drove Day and Night Without Stopping for One

question 20

Multiple Choice

If you drove day and night without stopping for one year without exceeding the legal highway speed limit in the United States, the maximum number of miles you could drive would be closest to:

• A) 8700.
• B) 300000.
• C) 500000.
• D) 1000000.
• E) 32000000.

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Definitions:

STRIPPED Cash Flows

Cash flows that are separated or "stripped" from an asset for investment or valuation purposes, often for the construction of zero-coupon bonds.

Arbitrage

The practice of taking advantage of price differences in different markets by buying low in one and selling high in another.

Yield Curve

A graph showing the relationship between the yields of various debt securities of the same credit quality but different maturities.

Expectations Hypothesis

A theory in finance that explains the structure of interest rates by suggesting that the long-term rate can be determined by current and future expected short-term interest rates.