Which One of the Following Must Be Equal for Two

question 30

Multiple Choice

Which one of the following must be equal for two bonds if they are to have similar changes in their prices given a relatively small change in bond yields?

• A)coupon payment
• B)time to maturity
• C)market price
• D)duration
• E)current yield

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Definitions:

Required Rate

The lowest return an investor is willing to accept on an investment to deem it as profitable.

Marginal Tax Rate

The rate at which the last dollar of a taxpayer's income is taxed, indicating the rate of tax that applies to their highest bracket of income.

Operating Cash Flow

Cash generated by a company's normal business operations, indicating whether a company is capable of generating sufficient positive cash flow to maintain and grow its operations.

Contribution Margin

The difference between sales revenue and variable costs of a product or service, often expressed as a percentage of sales revenue.