All Else Equal,the Greater the Default Risk

question 73

Multiple Choice

All else equal,the greater the default risk:

• A) the higher the face value of the bond.
• B) the higher the price of the bond.
• C) the lower the price of the bond.
• D) the lower the face value of the bond.
• E) the lower the interest rate of the bond.

Analyze and calculate the savings from taking advantage of cash discounts on purchases.

Apply mathematical skills in practical financial scenarios, such as loans, discounts, and maturity dates.

Grasp the concept of Discounting Notes and its financial implications.

Master the calculation of proceeds from discounted notes.

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Definitions:

Revenue

The total amount of money received by a company from its business activities, such as sales of goods or services, before any expenses are subtracted.

Cost Flow Assumptions

Accounting methods that determine how costs are assigned to inventory and cost of goods sold, such as FIFO, LIFO, and average cost.

FIFO

An inventory valuation method where the first items produced or purchased are the first sold, leading to inventory being valued at approximate recent costs.

LIFO

An inventory valuation method that assumes the last items added to the inventory are the first ones to be sold ("Last In, First Out").