Which of the Following Statements Is True

question 11

Multiple Choice

Which of the following statements is true?

• A) The lower the price of a bond, relative to its face value, the lower the interest rate.
• B) The lower the price of a bond, relative to its maturity, the lower the interest rate.
• C) The higher the price of a bond, relative to its face value, the higher the interest rate.
• D) The lower the price of a bond, relative to its face value, the higher the interest rate.

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Definitions:

Elastic in the Long Run

Describes a situation where the quantity demanded or supplied of a good or service responds significantly to price changes over a longer period.

Telephone Service

A communication service provided through electrical transmission of voice, fax, or other information.

Medical Care

Professional services provided by doctors, nurses, dentists, and other health professionals to treat or prevent health problems and enhance well-being.

Perfectly Elastic

A situation in economics where the quantity demanded or supplied changes infinitely in response to any change in price, typically represented with a horizontal demand or supply curve.