The Long Term Inflation Rate Average Was 3

question 8

Multiple Choice

The long term inflation rate average was 3.2% and you invested in long term corporate bonds over the same period which earned 6.1%. What was the average risk premium you earned and your precise rate of return?

• A) 2.9%; -2.9%
• B) 9.3%; 10.3%
• C) 2.9%; 2.81%
• D) cannot be determined

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Definitions:

Resource Consumption

The usage of resources by a company or process, including materials, energy, and labor, critical for understanding cost behaviors and environmental impact.

Activity-Based Costing

A costing methodology that assigns costs to products or services based on the activities and resources required to produce or deliver them.

Activity Cost Pools

A technique in managerial accounting where costs are aggregated based upon the activities that generate those costs, to assign costs more accurately.

Machine-Hours

A measure of production activity that quantifies the amount of time machinery is used to manufacture products during a specific period.