Which One of the Following Is Implied by an "Annual

question 39

Multiple Choice

Which one of the following is implied by an "annual" service level of 95 percent?

• A)Approximately 95 percent of demand between orders will be satisfied.
• B)The probability is 95 percent that all demand over the year will exceed supply.
• C)The probability is 95 percent that all demand over the year will equal supply.
• D)The probability is 95 percent that all demand over the year will not exceed supply.
• E)Approximately 95 percent of demand between orders will be lost.

Recognize the factors that determine bond prices and yields.

Differentiate between various types of bonds based on their risk level.

Understand the concept of yield to maturity (YTM) and its significance.

Interpret the implications of accrued interest in bond transactions.

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Definitions:

Face Amount

The nominal or dollar value stated on a financial instrument or security, such as a bond.

Maturity Date

The specific date on which the principal amount of a financial instrument, such as a bond or loan, becomes due and payable.

Term

A fixed or limited period for which something, such as an investment, insurance policy, or lease, lasts or is intended to last.

Direct Write-Off Method

An accounting method where uncollectible accounts receivable are directly written off against income at the time they are determined to be uncollectible.