Suppose the Market Interest Rate Falls from 3% to 2

question 14

Multiple Choice

Suppose the market interest rate falls from 3% to 2%.This will lead to ________ in bond prices and ________ in bond yields.

• A)a fall; a fall
• B)a fall; a rise
• C)a rise; a fall
• D)a rise; a rise
• E)no change; no change

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Definitions:

Taxable Income

The amount of income that is subject to taxes, calculated by subtracting allowable deductions from gross income.

Entire Cost

This term is not clearly defined in general accounting or financial terminology; hence, it could be mistaken or too vague without further context. NO.

Income Taxes

Taxes imposed by the government on the income generated by businesses and individuals within their jurisdiction.

Capital Budgeting

A process businesses use to evaluate and select major investment projects, considering their potential for future profits.