Which of the Following Statements Is Correct

question 53

Multiple Choice

Which of the following statements is correct?

• A)Other things held constant, a callable bond would have a lower required rate of return than a noncallable bond.
• B)Other things held constant, a corporation would rather issue noncallable bonds than callable bonds.
• C)Reinvestment rate risk is worse from a typical investor's standpoint than interest rate price risk.
• D)If a 10-year, $1,000 par, zero coupon bond were issued at a price which gave investors a 10 percent rate of return, and if interest rates then dropped to the point where rd = YTM = 5%, we could be sure that the bond would sell at a premium over its $1,000 par value.
• E)If a 10-year, $1,000 par, zero coupon bond were issued at a price which gave investors a 10 percent rate of return, and if interest rates then dropped to the point where rd = YTM = 5%, we could be sure that the bond would sell at a discount below its $1,000 par value.

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Definitions:

Great Person Approach

A theory in leadership that assumes that outstanding leaders are born, not made, and have inherent traits that make them effective.

Trait Approach

A theory of leadership that suggests certain qualities or characteristics are inherent in good leaders.

Skills Approach

A perspective on leadership that emphasizes the importance of acquiring and developing specific skills and abilities for effective leadership.

General Cognitive Ability

The overall mental capacity of an individual, including the ability to reason, plan, solve problems, think abstractly, comprehend complex ideas, learn quickly, and learn from experience.