Which of the Following Statements Are True

question 25

Multiple Choice

Which of the following statements are true?

• A)A liquid asset is one that can be quickly and cheaply converted into cash.
• B)The demand for a bond declines when it becomes less liquid,decreasing the interest rate spread between it and relatively more liquid bonds.
• C)The differences in bond interest rates reflect differences in default risk only.
• D)The corporate bond market is the most liquid bond market.

---

Definitions:

Equity Method

An accounting technique used for recording investments in associate companies where the investment is represented by the equity value.

Cost Method

An accounting approach whereby investments are recorded at their original purchase cost, without adjusting for changes in fair value, except for impairments.

Investment

The allocation of resources, such as capital or time, in the expectation of generating an income or profit.

CICA Handbook

The Canadian Institute of Chartered Accountants Handbook, which contains accounting and assurance standards in Canada.