Which of the Following Statements Is CORRECT

question 19

Multiple Choice

Which of the following statements is CORRECT?

• A) A zero coupon bond of any maturity will have more price risk than any coupon bond,even a perpetuity.
• B) If their maturities and other characteristics were the same,a 5% coupon bond would have more price risk than a 10% coupon bond.
• C) A 10-year coupon bond would have more reinvestment risk than a 5-year coupon bond,but all 10-year coupon bonds have the same amount of reinvestment risk.
• D) A 10-year coupon bond would have more price risk than a 5-year coupon bond,but all 10-year coupon bonds have the same amount of price risk.
• E) If their maturities and other characteristics were the same,a 5% coupon bond would have less price risk than a 10% coupon bond.

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Definitions:

Fixed Factory Overhead Volume Variance

A measure used in managerial accounting to assess the difference between the budgeted and the actual volume of production, affecting fixed overhead costs.

Standard Fixed Overhead Rate

Rate calculated by dividing the budgeted fixed overhead by the standard activity index (like labor hours or machine hours) expected.

Productive Capacity

The maximum output a system, entity, or project can produce over a specific period under normal conditions.

Direct Labor Hour

A measure of the amount of time spent by workers directly manufacturing a product or providing a service, used for cost allocation.