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In Ratio Analysis, the Financial Statements Being Used for Comparison

question 183

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In ratio analysis, the financial statements being used for comparison should be dated at the same point in time during the year. If not, the effect of seasonality may produce erroneous conclusions and decisions.


Definitions:

Par-Value

Par-value is the legal capital per share, established for stocks and bonds, representing a minimal value below which shares cannot be issued.

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to changes in interest rates, often used to assess interest rate risk.

Coupon Rate

The annual interest rate paid on a bond's face value to its holders, expressed as a percentage of the face value.

Duration

Measures the sensitivity of a bond's price to changes in interest rates, calculated as a weighted average of the times until the bond's cash flows are received.

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