Which of the Following Statements Is True

question 57

Multiple Choice

Which of the following statements is true?

• A)The more liquid the bond, the lower the yield.
• B)Tax-free bonds normally have a higher interest rate than other types of bonds.
• C)The price of a bond increases as it becomes more risky.
• D)The yield curve illustrates the relative default risks of alternative types of bonds.

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Definitions:

Residual Value

Residual value is the estimated value that an asset will have at the end of its useful life, crucial in leasing and depreciation calculations.

Reduce Uncertainty

Strategies or actions taken to minimize the unpredictability or variability in outcomes.

Leasing

A financial arrangement where a lessee pays the lessor for the use of an asset for a specified period of time, without owning the asset.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts.