Classify Each of the Following in Terms of Their Effect

question 18

Multiple Choice

Classify each of the following in terms of their effect on interest rates (increase or decrease) :
I. Perceived risk of financial securities increases
II. Near term spending needs decrease
III. Future profitability of real investments increases

• A) I increases, II increases, III increases
• B) I increases, II decreases, III decreases
• C) I decreases, II increases, III increases
• D) I decreases, II decreases, III decreases
• E) none of the above

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Definitions:

Expired Insurance

The portion of an insurance premium that has been used up during the term of the policy and is therefore no longer in effect.

Assets

Resources owned by a company, providing future economic benefits, including cash, inventory, and property.

Inadvertently Omitted

Accidentally left out or not included, typically referring to information or details that were missed unintentionally.

Depreciation Expense

The allocation of the cost of a tangible fixed asset over its useful life, reflecting the decrease in value over time.