Which of the Following Statements Is TRUE

question 79

Multiple Choice

Which of the following statements is TRUE?

• A)Labor is always a variable input, whereas Capital is always a fixed input.
• B)Labor is always a fixed input, whereas Capital is always a variable input.
• C)Labor can be a fixed input., and Capital can be a variable input.
• D)Labor can be a fixed input, and Capital is always a fixed input.

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Definitions:

Bondholder

An investor who owns bonds issued by corporations or governments, thereby lending money to the issuer in return for periodic interest payments and the return of principal at maturity.

Annual Coupon Rate

The interest rate a bond pays its holder, expressed as a percentage of its face value and payable annually.

Bond

A fixed-income instrument that represents a loan made by an investor to a borrower, typically corporate or governmental, which includes terms regarding the interest rate and when the loaned funds (bond principal) must be paid back (maturity).

Effective EAR

The Effective Annual Rate is the actual return on an investment, taking into account the effect of compounding interest.