Which of the Following Are Generally True of All Bonds

question 56

Multiple Choice

Which of the following are generally true of all bonds?

• A) The longer a bond's maturity, the greater is the rate of return that occurs as a result of the increase in the interest rate.
• B) Even though a bond has a substantial initial interest rate, its return can turn out to be negative if interest rates rise.
• C) Prices and returns for short-term bonds are more volatile than those for longer term bonds.
• D) A fall in interest rates results in capital losses for bonds whose terms to maturity are longer than the holding period.

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Definitions:

Equivalent Unit

A measure used in cost accounting to express the amount of work done on partially completed units in terms of fully completed units.

Process Costing

An accounting methodology used for homogenous products, allocating production costs based on processing departments or cycles.

Conversion Costs

The costs incurred in the process of converting raw materials into finished goods, typically including direct labor and manufacturing overhead.

Cutting Department

A specific section within a manufacturing facility where materials (often fabric) are cut to size before being assembled into final products.