Interest-Rate Risk Would Not Matter to Which of the Following

question 59

Multiple Choice

Interest-rate risk would not matter to which of the following bondholders?

• A) A holder of a U.S. government bond.
• B) A holder of a U.S. government bond indexed for inflation.
• C) A holder of a U.S. government bond who plans on selling it in one year.
• D) A holder of a U.S. government bond that plans on holding it until it matures.

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Definitions:

Accumulated Depreciation

The cumulative depreciation of an asset up to a single point in its life, representing the reduction in value due to wear and tear, age, or obsolescence.

Double-Declining Balance

A method of accelerated depreciation where an asset's value decreases by twice the rate of traditional straight-line depreciation.

Straight-Line Depreciation

A process for dividing the expenditure of a tangible resource into consistent annual portions throughout its service life.

Journal Entries

Records of financial transactions in the accounting system in chronological order.