What Will Happen to the Interest on a Bond as the Bond's

question 14

Multiple Choice

What will happen to the interest on a bond as the bond's maturity increases?

• A)The bond will pay less interest because it has less risk.
• B)The bond will pay less interest because it has more risk.
• C)The bond will pay more interest because it has more risk.
• D)The bond will pay more interest because it has less risk.

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Definitions:

Debit

An entry recorded on the left side of a bookkeeping ledger for a transaction that increases asset or expense accounts, or decreases liability, equity, or revenue accounts.

Sales Tax Payable

A liability account that records the amount of sales tax collected from customers, which is owed to the government.

Normal Balance

Represents the side (debit or credit) of an account that increases its value, based on the double-entry accounting system.

Debit

An accounting entry that increases an asset or expense account, or decreases a liability or equity account.