Which of the Below Statements Is FALSE

question 58

Multiple Choice

Which of the below statements is FALSE?

• A) The PO security is purchased at a substantial discount from par value.
• B) A PO is a security whose price would rise when interest rates decline and fall when interest rates rise.
• C) In contrast to the PO investor, the IO investor wants prepayments to be slow.
• D) A PO has no par value.

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed overhead) in the cost of a product.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product.

Factory Overhead

All indirect costs associated with manufacturing, including but not limited to utilities, maintenance of equipment, and factory staff salaries, excluding direct labor and direct materials.

Absorption Costing Income Statement

An income statement format that incorporates the full cost of manufacturing a product, including both fixed and variable manufacturing costs, in determining the cost of goods sold.