Risk Is an Important Component of Interest Rates

question 29

Multiple Choice

Risk is an important component of interest rates.Which of the following risks is NOT a determinant of interest rates?

• A)Default risks
• B)Interest rate risks
• C)Institutional risks
• D)Marketability risks

---

Definitions:

Capital Budgeting

The process of planning and evaluating expenditures on assets whose cash flows are expected to extend beyond one year.

Undepreciated Capital Cost (UCC)

The amount remaining to be claimed as Capital Cost Allowance over time for an asset class.

Class

A category or grouping used to organize items, objects, or concepts based on shared characteristics or attributes.

Declining-Balance Depreciation

A method of depreciation that results in larger depreciation expenses during the earlier years of an asset's life and smaller charges in the later years.