Which of the Following Statements Is Correct

question 122

Multiple Choice

Which of the following statements is correct?

• A) Yield spreads between bonds of different quality remain static over time.
• B) Yield spreads are set by the Securities Exchange Commission.
• C) Yield spreads between bonds of different quality change over time.
• D) None of the statements are correct.

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Definitions:

Consumption Tax

is a tax on spending on goods and services imposed either at the point of sale, collected as a sales tax, or as part of a VAT (value added tax) system.

Income Tax

A tax levied by a government directly on personal, or organizational income.

Double Taxation

The levying of tax by two different authorities on the same income, asset, or financial transaction.

Saving Rate

The percentage of take-home pay that is set aside for savings instead of being used for consumer spending.