Which One of the Following Sentences Is Correct Concerning Fixed-Income

question 4

Multiple Choice

Which one of the following sentences is correct concerning fixed-income securities?

• A)The coupon rate on a fixed-income security is equal to the current yield.
• B)The price of a fixed-income security is inversely related to the current yield.
• C)Fixed-income securities are default free.
• D)Fixed-income securities tend to be more liquid than money market securities.
• E)Fixed-income securities include all debt instruments issued by the U.S. government.

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Definitions:

Price of Capital

The cost of using capital resources, such as equipment or buildings, often reflected in interest rates or rental prices.

Price of Labor

The wage rate or compensation given to workers for their labor, typically expressed per hour or year.

Isocost Line

A graphical representation in economics showing all combinations of inputs that have the same total cost.

Price of Capital

The cost of using financial assets for production, often reflected in interest rates or rents.