Which of the Following Statements Is CORRECT

question 56

Multiple Choice

Which of the following statements is CORRECT?

• A)If a 10-year, $1,000 par, zero coupon bond were issued at a price that gave investors a 10% yield to maturity, and if interest rates then dropped to the point where rd = YTM = 5%, the bond would sell at a premium over its $1,000 par value.
• B)If a 10-year, $1,000 par, 10% coupon bond were issued at par, and if interest rates then dropped to the point where rd = YTM = 5%, we could be sure that the bond would sell at a premium above its $1,000 par value.
• C)Other things held constant, a corporation would rather issue noncallable bonds than callable bonds.
• D)Other things held constant, a callable bond would have a lower required rate of return than a noncallable bond.
• E)Reinvestment rate risk is worse from an investor's standpoint than interest rate price risk if the investor has a short investment time horizon.

Recognize the importance of managerial willingness in the success of incentive plans.

Grasp the prevalence and rationale behind financial incentives for salespeople.

Analyze the effectiveness and challenges of various incentive systems.

Understand the concepts and purposes of various employee compensation plans, including Scanlon and Improshare plans.

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Definitions:

Index of Forbidden

A list of books that the Roman Catholic Church banned because they were considered heretical or contrary to morality, officially called the Index Librorum Prohibitorum.

Papacy

The office or authority of the Pope, the leader of the Roman Catholic Church, representing both spiritual and temporal power.

Botanical Gardens

Scientifically managed gardens dedicated to the collection, cultivation, and display of a wide range of plants labeled with their botanical names for the purposes of research, conservation, education, and public enjoyment.

Museums

Institutions that collect, preserve, study, and exhibit objects of scientific, historical, or cultural importance to educate and entertain the public.