Which of the Following Statements About Financial Markets and Securities

question 125

Multiple Choice

Which of the following statements about financial markets and securities is true?

• A) A bond is a long-term security that promises to make periodic payments called dividends to the firm's residual claimants.
• B) A debt instrument is intermediate term if its maturity is less than one year.
• C) A debt instrument is intermediate term if its maturity is ten years or longer.
• D) The maturity of a debt instrument is the number of years (term) to that instrument's expiration date.

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Definitions:

Acid-Test Ratio

A financial metric that measures a company's ability to meet its short-term obligations with its most liquid assets.

Working Capital

Current assets less current liabilities.

Current Ratio

A financial metric that measures a company's ability to pay off its short-term liabilities with its short-term assets.

Marketable Securities

Short-term investments that are easily convertible into cash, typically within one year.