Current Liabilities Are Debts of the Firm That Will Be

question 3

Multiple Choice

Current liabilities are debts of the firm that will be due within:

• A) three months.
• B) six months.
• C) one year.
• D) two years.

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Definitions:

Bond Price

Bond price is the present value of a bond's future interest payments and its redemption value at maturity, which fluctuates with interest rates and the bond's credit rating.

Tax Exempt Equivalent Yield

A calculation that determines the return needed on a taxable bond to make it equivalent to the yield on a tax-exempt bond, factoring in the investor's tax rate.

Marginal Tax Rate

The amount of tax paid on an additional dollar of income.

Bond Yield

The return an investor realizes on a bond, calculated by dividing the annual interest payments by the current market price of the bond.