A Company with $60,000 in Current Assets and $35,000 in Current

question 271

Multiple Choice

A company with $60,000 in current assets and $35,000 in current liabilities pays a $1,000 current liability. As a result of this transaction, the current ratio and working capital will

• A) both decrease.
• B) both increase.
• C) increase and remain the same, respectively.
• D) remain the same and decrease, respectively.

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Definitions:

Duration

A measure of the sensitivity of the price of a bond or other fixed-income investment to changes in interest rates, typically expressed in years.

Basis Points

Basis Points are a unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument, with one basis point being 1/100th of 1%.

Yield To Maturity

The total return anticipated on a bond if it is held until it matures, including all interest payments and repayment of principal.

Duration

An indicator reflecting how the price of bonds or similar debt securities reacts to fluctuations in interest rates, usually stated in terms of years.