Which of the Following R-Values Indicates the Weakest Relationship Between

question 2

Multiple Choice

Which of the following r-values indicates the weakest relationship between two variables?

• A)  0.45
• B)  0.30
• C)  0.03
• D)  0.45

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Definitions:

Maturity Risk Premium

The additional interest rate or yield that investors demand to hold longer-maturity debt over shorter-term instruments.

Lenders

Individuals or institutions that provide funds to borrowers under the agreement that the funds will be repaid with interest.

Interest Rate Model

A mathematical model used to forecast future interest rates or to price financial derivatives and manage interest rate risk.

Default Risk Premium

The additional amount a borrower must pay to compensate the lender for assuming the risk of default.