Depreciation Is

question 26

Multiple Choice

Depreciation is:

• A) the decline in equipment value due to obsolescence
• B) the periodic cost of equipment spread over the future periods in which the equipment is expected to be used
• C) the difference between the original cost and current market value
• D) All of these answers are correct.

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Definitions:

Time To Maturity

The duration remaining until the final repayment date of a bond or other fixed-income security. It decreases as the bond approaches its maturity date.

Coupon Rate

Each year, the interest rate given on a bond calculated as a percentage of its nominal value.

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates, expressed in years.

Interest Rate Risk

The potential for investment losses due to fluctuations in interest rates, affecting the value of interest-bearing assets.