Which of the Following Are Generally TRUE of Bonds

question 5

Multiple Choice

Which of the following are generally TRUE of bonds?

• A)A bond's return equals the yield to maturity when the time to maturity is the same as the holding period.
• B)A rise in interest rates is associated with a fall in bond prices,resulting in capital gains on bonds whose terms to maturity are longer than the holding periods.
• C)The longer a bond's maturity,the smaller is the size of the price change associated with an interest rate change.
• D)Prices and returns for short-term bonds are more volatile than those for longer-term bonds.

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Definitions:

Constrained Resource

A factor that limits the output of a process or system, such as a machine, worker, or material that is in short supply.

Contribution Margin

The amount remaining from sales revenue after variable expenses are deducted, indicating how much contributes to covering fixed costs and profit.

Special Order

An order for goods or services that is outside the company's normal production routine or product range.

Resale Value

The estimated amount that an asset or good will be sold for at the end of its useful life.