Transactions Such as the Purchase of Assets or the Issuance

question 45

Multiple Choice

Transactions such as the purchase of assets or the issuance of debt are not considered income because:

• A) they involve external parties.
• B) they necessarily involve cash.
• C) they do not result in an increase in equity.
• D) they both result in an increase of the asset or liability concerned.
• E) they both result in a reduction of leverage.

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Definitions:

Real Estate

Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature.

Coupon Bond

A bond that offers interest payments to its holder through coupons attached to the bond, redeemable at specified intervals before the bond's maturity date.

Zero Coupon Bond

A bond that is issued at a discount to its face value and pays no interest before maturity, when its full face value is repaid.

Nominal Market Yield

The stated or face interest rate of a bond or other fixed-income security without adjusting for inflation.