Which of the Following Statements Is True of the Federal

question 22

Multiple Choice

Which of the following statements is true of the Federal Trade Commission Act (FTC Act) ?

• A) It can sue only in state courts to obtain compensation on behalf of consumers.
• B) It usually cannot enforce a cease-and-desist order in any case of violation.
• C) Section 5 of the FTC Act excludes monitoring of firms indulging in any consumer malpractice.
• D) It has been used extensively to regulate business conduct.

---

Definitions:

Substitution Swap

A Substitution Swap is a strategy in fixed-income markets where an investor exchanges one bond for another with similar features but more attractive terms.

Interest Rate Risk

The risk of losing value in an investment due to a change in interest rates, affecting both bonds and loans.

Long-Duration Bonds

Bonds with a longer time until maturity, typically more than 10 years, making them more sensitive to changes in interest rates.

Duration Rule

A principle that estimates the sensitivity of a bond's price to changes in interest rates, calculated as the weighted average time until a bond's cash flows are received.