How Is the Interest Rate That Prevails in the Bond

question 88

Multiple Choice

How is the interest rate that prevails in the bond market determined?

• A)by the interaction of stock prices and bond prices
• B)by the decision of the president, in consultation with Congress
• C)by the demand for and supply of bonds
• D)by the Board of Governors of the New York Stock Exchange

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Definitions:

Net Cash Flow

The variation in cash earnings versus expenditures for a business during a certain period.

Debt Ratio

A financial ratio that measures the extent of a company's leverage, calculated by dividing total liabilities by total assets.

Equity Multiplier

A financial leverage ratio that measures the portion of a company's assets financed by its shareholders' equity.

Stockholders' Equity

Represents the residual interest in the assets of a corporation after deducting liabilities, essentially the net worth attributable to shareholders.