Which of the Following Statements Is CORRECT

question 17

Multiple Choice

Which of the following statements is CORRECT?

• A) One advantage of a zero coupon Treasury bond is that no one who owns the bond has to pay any taxes on it until it matures or is sold.
• B) Long-term bonds have less price risk but more reinvestment risk than short-term bonds.
• C) If interest rates increase,all bond prices will increase,but the increase will be greater for bonds that have less price risk.
• D) Relative to a coupon-bearing bond with the same maturity,a zero coupon bond has more price risk but less reinvestment risk.
• E) Long-term bonds have less price risk and also less reinvestment risk than short-term bonds.

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Definitions:

Transportation Costs

Expenses associated with the movement of materials, goods, or personnel by road, rail, air, or sea.

Short-Term Lease

A lease agreement with a duration, typically less than a year, used for temporary occupancy or use of assets.

Fixed Asset

Tangible assets, like buildings, machinery, or vehicles, intended for use over a long period and not readily convertible into cash.

Rent Expense

The cost incurred by a business for leasing property or equipment used in operations, reflected as an expense on the income statement.