As the Ytm of a Bond Rises,which of the Following

question 6

Multiple Choice

As the ytm of a bond rises,which of the following is most valid?

• A)The bond price rises,slowly at low ytm,then more rapidly at higher ytm.
• B)The bond price falls,slowly at low ytm,then more rapidly at higher ytm..
• C)The bond price rises,rapidly at low ytm,then more slowly at higher ytm.
• D)The bond price falls,rapidly at low ytm,then more slowly at higher ytm.

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Definitions:

Cash Break-Even

It refers to the point at which a business generates just enough revenue to cover its operating expenses, indicating no profit or loss.

Degree of Operating Leverage

A financial ratio that measures the sensitivity of a company’s operating income to its sales, indicating how a change in sales volume will impact operating income.

Forecasting Risk

The risk that a forecast may prove to be incorrect, potentially leading to financial losses or missed opportunities in financial markets.

Cost-Cutting Proposal

A plan or suggestion aimed at reducing expenses to improve profitability.