Which One of the Following Items Would Be the Most

question 50

Multiple Choice

Which one of the following items would be the most liquid?

• A) Pizza.
• B) Ticket to next week's basketball game.
• C) Stereo.
• D) Dollar bill.
• E) U.S. savings bond.

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Definitions:

Effective Interest Method

A method of calculating the interest expense on a bond or loan that considers the impact of amortizing premium or discount over the life of the financial instrument.

Interest Expense

The cost incurred by an entity for borrowed funds, such as loans or bonds.

Discount on Bonds Payable

The difference when a bond is issued for less than its face value, which affects the interest expense over the bond's life.

Par Value

The face value of a bond or stock, representing the amount that will be returned to the holder at maturity, often used as a legal face value for stocks.