Which of the Following Statements Is TRUE

question 13

Multiple Choice

Which of the following statements is TRUE?

• A)A liquid asset is one that can be quickly and cheaply converted into cash.
• B)The demand for a bond declines when it becomes less liquid,decreasing the interest rate spread between it and relatively more liquid bonds.
• C)The differences in bond interest rates reflect differences in default risk only.
• D)The corporate bond market is the most liquid bond market.

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Definitions:

Fair Value

An estimate of the price at which an asset would trade in a fair transaction between market participants at the measurement date.

Trading Securities Portfolio

A collection of stocks, bonds, or other securities that a company holds for the primary purpose of selling them in the short term to profit from price changes.

Year-end Adjustment

Accounting entries made at the end of an accounting period to record revenues and expenses in the correct period, also known as adjusting entries.

Income Statement

Rephrase: A financial statement that shows a company's revenue and expenses over a specific period, highlighting its performance in terms of profit or loss.