Which of the Following Can Cause the Price of a Corporate

question 39

Multiple Choice

Which of the following can cause the price of a corporate bond to fluctuate until the maturity date?

• A)changes in overall interest rates in the economy
• B)the financial condition of the company issuing the bond
• C)the factors of supply and demand
• D)an upturn or downturn in the economy
• E)All of these

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Definitions:

Shareholder Basis

The amount invested in a company by its shareholders plus any earnings retained by the company.

Earnings and Profits

A measure used for tax purposes, representing a corporation's net income plus or minus certain tax-preferred items.

Cash Dividend

A payment made by a corporation to its shareholders, usually in cash, out of its profits or reserves.

Basis

The amount of investment in property for tax purposes, used to calculate gain or loss upon sale or disposition of the property.