Which of the Following Is Correct with Respect to Bonds

question 265

Multiple Choice

Which of the following is correct with respect to bonds?

• A) The market value (selling price) of a bond at any given time is determined solely by its stated interest rate.
• B) A bond with a higher stated interest rate than the "going rate" on similar quality bonds will probably sell at a price below its face value.
• C) A bond with a sinking fund provision is riskier than a bond without such a provision.
• D) The amount of the premium or discount on a bond depends largely on how far in the future the maturity date is.
• E) None of these are correct; bond prices are influenced by too many factors to make simple statements.

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Definitions:

Expense Allocation

The process of assigning or distributing indirect costs to different departments, projects, or products.

Maintenance Department

The division within a company responsible for maintaining equipment, buildings, and other assets to ensure efficient operation.

Direct Expenses

Direct expenses are costs that can be directly attributed to a specific product or service, such as raw materials or labor directly involved in production.

Cash Conversion Cycle

A metric that evaluates how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales.