Which of the Following Equations Expresses the Definition of "Income

question 4

Multiple Choice

Which of the following equations expresses the definition of "income"?

• A) Income = Revenues - Expenses
• B) Income = (Revenues + Gains) - (Expenses + Losses)
• C) Income = Revenues + Gains
• D) Income = Gains - Losses

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Definitions:

Par

The face value of a bond or other financial instrument, the amount to be repaid by the issuer at maturity.

Yield to Maturity

The total return anticipated on a bond if it is held until the date it matures, expressed as an annual rate.

Par

The face value of a bond or stock, which is the amount the issuer agrees to pay back at maturity, often set at $100 for bonds.

SML Approach

Stands for Security Market Line, a graphical representation used in finance to demonstrate the relationship between risk and expected return of assets.