A Treasury Bond Due in 1 Year Has a Yield

question 88

Multiple Choice

A Treasury bond due in 1 year has a yield of 6.3%, while a Treasury bond due in 5 years has a yield of 8.8%. A bond due in 5 years issued by High Country Marketing Corp. has a yield of 9.6%, while a bond due in 1 year issued by High Country Marketing Corp. has a yield of 6.8%. The default risk premiums on the 1-year and 5-year bonds issued by High Country Marketing Corp. are, respectively, ________ and ________.

• A).4%; .3%
• B) .4%; .5%
• C) .5%; .5%
• D) .5%; .8%

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Definitions:

Business Unit

A segment of a company with its distinct operations and management, often treated as an individual entity within the larger corporation for strategic and operational planning.

Avoidable

Something described as avoidable can be prevented or not incurred if certain actions are taken or certain conditions are met.

Performance Report

A document that compares actual results to planned or expected results in areas such as budgeting, operations, and project management.

Improving Performance

The process of increasing the efficiency, effectiveness, or profitability of an operation, system, or organization.