The Purchase of an Asset on Credit

question 129

Multiple Choice

The purchase of an asset on credit

• A)increases assets and shareholders' equity.
• B)increases assets and liabilities.
• C)decreases assets and increases liabilities.
• D)has no effect on total assets.

---

Definitions:

Par Value

The face value of a bond or stock, typically the value printed on the certificate, which does not necessarily reflect its market value.

Treasury Bond

Long-term government debt securities issued by the U.S. Department of the Treasury, with maturity periods typically ranging from 20 to 30 years, considered low-risk investments.

Annual Coupon

The yearly interest payment made by a bond issuer to its bondholders, usually fixed at the time of issuance.

Yield to Maturity

The total expected return on a bond if held until its maturity date, considering all payments from interest and principal, expressed as an annual rate.