Because of a Change in the Required Rate of Return

question 43

Multiple Choice

Because of a change in the required rate of return from 11 percent to 13 percent, the bond price of a zero-coupon bond will fall from $1,000 to $860. Thus, the bond price elasticity for thisbondis

• A) 0.77.
• B) -0.77.
• C) -0.90.
• D) -1.06.
• E) none of the above.

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Definitions:

Days' Sales In Inventory

A financial measure indicating the average time in days that a company takes to turn its inventory into sales.

Total Current Assets

The sum of all assets that are expected to be converted into cash, sold, or consumed within one year or during the normal operation cycle of the business, whichever is longer.

Receivable Turnover

A financial ratio that measures how efficiently a company collects on its outstanding accounts receivable.

Inventory Turnover

A measure of how quickly a company sells and replaces its inventory in a given period.