Which of the Following Statements Is CORRECT

question 79

Multiple Choice

Which of the following statements is CORRECT?

• A) Assume that two bonds have equal maturities and are of equal risk,but one bond sells at par while the other sells at a premium above par.The premium bond must have a lower current yield and a higher capital gains yield than the par bond.
• B) A bond's current yield must always be either equal to its yield to maturity or between its yield to maturity and its coupon rate.
• C) If a bond sells at par,then its current yield will be less than its yield to maturity.
• D) If a bond sells for less than par,then its yield to maturity is less than its coupon rate.
• E) A discount bond's price declines each year until it matures,when its value equals its par value.

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Definitions:

Process Costing System

A costing method used for homogenous products, systematically allocating production costs to units of output.

Weighted Average Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the weighted average cost of all inventory items.

Direct Labor

The cost associated with labor directly involved in the production of goods or services.

Indirect Labor

Labor costs of employees who do not work directly on a product but whose services are necessary for the manufacturing process, including maintenance and supervision staff.