Which of the Following Statements Concerning Bonds and Risk Is

question 41

Multiple Choice

Which of the following statements concerning bonds and risk is true?

• A) Because the interest payments and maturing value are known, the only risk associated with investing in bonds is default risk.
• B) Zero coupon bonds are always more risky than bonds with high coupon rates because of the time value of money.
• C) Bonds are generally less risky than common stock because of the preference for debt over equity in the event of bankruptcy and liquidation.
• D) B-rated bonds are above average for risk, i.e., less risky than the average bond.

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Definitions:

Consolidated Statement

Financial reports that aggregate the financial results of a parent company and its subsidiaries into a single document.

Not-For-Profit Entity

An organization that operates for purposes other than making a profit, such as charitable, educational, or cultural purposes, and reinvests any excess revenues in its mission.

Donor's Gift

A voluntary conveyance of money, goods, or services from an individual or organization, without the expectation of direct compensation but often with philanthropic intentions.

Internal Revenue Code

The Internal Revenue Code is the comprehensive set of tax laws created by the United States federal government, overseeing federal tax obligations.