If You Expected Interest Rates to Fall,you Would Prefer to Own

question 62

Multiple Choice

If you expected interest rates to fall,you would prefer to own bonds with

• A) short maturities and low coupons.
• B) long maturities and high coupons .
• C) long maturities and low coupons.
• D) short maturities and high coupons.
• E) none of the above.

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Definitions:

Earnings Per Share

A financial ratio indicating the portion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of the company's profitability.

Net Income

is the profit a company makes after deducting all costs and expenses from its total revenue, including taxes and interest.

Interest Expense

The cost incurred by an entity for borrowed funds, which can include payments on loans, bonds, or lines of credit.

Return on Common Stockholders' Equity

A measure of profitability that indicates how much profit a company generates with the money shareholders have invested.