The Rate of Return on a Bond Can Be Negative

question 51

Multiple Choice

The rate of return on a bond can be negative if market yields

• A) rise.
• B) fall.
• C) become negative.
• D) Rates of return cannot be negative.

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Definitions:

Net Income

The amount of money remaining after all operating expenses, taxes, and dividends have been subtracted from total revenue.

Fair Value

An estimate of the price at which an asset or liability could be exchanged between knowledgeable, willing parties in an arm's length transaction.

Equity Method

An accounting technique used to record investments in other companies when the investor has significant influence over the company.