Which of the Following Statements Is CORRECT

question 57

Multiple Choice

Which of the following statements is CORRECT?

• A) If the Federal Reserve unexpectedly announces that it expects inflation to increase,then we would probably observe an immediate increase in bond prices.
• B) The total yield on a bond is derived from dividends plus changes in the price of the bond.
• C) Bonds are generally regarded as being riskier than common stocks,and therefore bonds have higher required returns.
• D) Bonds issued by larger companies always have lower yields to maturity (due to less risk)than bonds issued by smaller companies.
• E) The market price of a bond will always approach its par value as its maturity date approaches,provided the bond's required return remains constant.

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Definitions:

Courses of Action

Different strategies or plans that an entity can choose to undertake in response to various scenarios or problems.

Quick Ratio

The quick ratio, or acid-test ratio, measures a company's ability to pay its short-term liabilities with its most liquid assets.

Inventory

The merchandise or stock that a business has on hand to sell to customers.

Activity Ratios

Financial metrics that measure how efficiently a company utilizes its assets to generate sales or revenue.