Everything Else Held Constant,when Bonds Become Less Widely Traded,and as a Consequence

question 164

Multiple Choice

Everything else held constant,when bonds become less widely traded,and as a consequence the market becomes less liquid,the demand curve for bonds shifts to the ________ and the interest rate ________.

• A)right;rises
• B)right;falls
• C)left;falls
• D)left;rises

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Definitions:

Semiannual Interest

Interest that is calculated and paid twice a year, often on a bond or loan.

Bond Premium

The amount by which the market price of a bond exceeds its face value, usually occurring when the bond's interest rate is higher than the current market rate.

Straight-line Method

An accounting method of depreciating fixed assets where the asset's cost is evenly distributed over its useful life to allocate the expense of the asset over its lifespan.

Earnings Per Share

A measure of a company's profitability, calculated as net income divided by the number of outstanding shares.