All Else Equal, Which of the Following Bonds Would Offer

question 45

Multiple Choice

All else equal, which of the following bonds would offer the highest expected rate of return?

• A)collateralized straight bond
• B)callable bond
• C)convertible bond
• D)putable bond

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Definitions:

Variable Expenses

Costs that change in proportion to the activity of a business, such as sales commissions or raw materials.

Net Operating Income

is the total profit of a company after operating expenses are subtracted from revenue but before deducting interest and taxes.

Break-Even Sales

The amount of sales revenue required to cover all fixed and variable costs, resulting in zero net income or loss.

Variable Expenses

Variable expenses fluctuate in direct proportion to changes in activity level or volume, such as sales or production quantities.