-In the Figure Above,the Price of Bonds Would Fall from P₁

question 68

Multiple Choice

-In the figure above,the price of bonds would fall from P₁ to P_{2 when}

• A)inflation is expected to increase in the future.
• B)interest rates are expected to fall in the future.
• C)the expected return on bonds relative to other assets is expected to increase in the future.
• D)the riskiness of bonds falls relative to other assets.

Compute the expected contribution margin given a specific activity level.

Understand the cost formula for both variable and fixed expenses.

Determine net operating income using the contribution approach.

Analyze and calculate average fixed costs per unit at a defined activity level.

---

Definitions:

Cash Flow

The net amount of cash and cash-equivalents being transferred into and out of a business, indicating the organization's liquidity.

Bond Principal

Bond principal, or face value, is the amount that the issuer agrees to pay the bondholder at maturity, excluding any interest payments.

Coupon Rate

The interest rate on a bond, determined as a percentage of the bond's face value, that the issuer promises to pay the bondholder annually.

Market Rate

The current price or interest rate at which an asset or service can be bought or sold in a particular market.