Which of the Following Statements Is CORRECT

question 15

Multiple Choice

Which of the following statements is CORRECT?

• A) If expected inflation increases, interest rates are likely to increase.
• B) If individuals in general increase the percentage of their income that they save, interest rates are likely to increase.
• C) If companies have fewer good investment opportunities, interest rates are likely to increase.
• D) Interest rates on all debt securities tend to rise during recessions because recessions increase the possibility of bankruptcy, hence the riskiness of all debt securities.
• E) Interest rates on long-term bonds are more volatile than rates on short-term debt securities like T-bills.

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Definitions:

Limited Partnership

A business structure where some owners are general partners responsible for the day-to-day operations, while others are limited partners investing but not involved in management.

Management of Partnership

Overseeing the operation and administration of a business partnership, including decision-making and financial management.

Limited Partners

Investors in a limited partnership who contribute capital but have limited liability and are not involved in day-to-day management.

Cannot Withdraw

Describes a condition where an individual is unable to retrieve their funds or assets from a bank account, investment, or contract.