Which of the Following Is Correct

question 39

Multiple Choice

Which of the following is correct?

• A)Lenders sell bonds and borrowers buy them.
• B)Long-term bonds usually pay a lower interest rate than do short-term bonds because long-term bonds are riskier.
• C)The term junk bonds refers to bonds that have been resold many times.
• D)None of the above is correct.

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Definitions:

R-squares

A statistical measure in finance that represents the proportion of the variance for a dependent variable that's explained by an independent variable or variables in a regression model.

Portfolio Performance

The assessment of how an investment portfolio has done in terms of returns for the risk taken, often compared against benchmarks or goals.

Treynor-Black Model

A special case of the Markowitz model of efficient diversification, derived by assuming returns are generated by the index model.

Residual Variance

The variance of the error terms in a regression model, representing the amount of variation that cannot be explained by the model's inputs.