Which of the Following Statements Is True

question 2

Multiple Choice

Which of the following statements is true?

• A) A liquid asset is one that can be quickly and cheaply converted into cash.
• B) The demand for a bond declines when it becomes less liquid, decreasing the interest rate spread between it and relatively more liquid bonds.
• C) The differences in bond interest rates reflect differences in default risk only.
• D) The corporate bond market is the most liquid bond market.

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Definitions:

Cost Center

A segment within an organization that is responsible for incurring costs, without directly contributing to the company’s income.

Sales Journal

A record of sales transactions where credit sales are recorded.

Gross Profit

The financial metric that represents the difference between sales revenue and the cost of goods sold, before deducting overheads, payroll, taxation, and interest payments.

Profit Center

A branch or division of a company that is treated as a separate entity for the purpose of calculating its profitability.