Which of the Following Is a TRUE Statement About the Relationship

question 115

Multiple Choice

Which of the following is a TRUE statement about the relationship between the price of bonds and the interest rate?

• A) The prices of bonds are directly related to the interest rate.
• B) The prices of bonds increase when the interest rates rise.
• C) The prices of bonds are unrelated to the interest rate.
• D) The prices of bonds are inversely related to the interest rate.

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Definitions:

Comprehensive Income

Comprehensive income includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. It encompasses net income and other comprehensive income items.

Interest Revenue

Income earned on investments, such as loans and securities, over a period.

Operating Income

Revenue from business operations after deducting operating expenses, but before interest and taxes.

Cost Method

An accounting method used to value certain investments at their original purchase cost, without adjusting for market fluctuations.