An Investor Who Expects Declining Interest Rates Would Maximise Their

question 9

Multiple Choice

An investor who expects declining interest rates would maximise their capital gain by purchasing a bond that has a ________ coupon and a ________ term to maturity.

• A)low; long
• B)high; short
• C)high; long
• D)zero; long

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Definitions:

Account Receivable

Money owed to a business by its customers for goods or services that have been delivered but not yet paid for.

Total Current Assets

The sum of all assets expected to be converted into cash, sold, or consumed within one year or the normal operating cycle, whichever is longer.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of a company's accounts receivable that may not be collectible.

Written off Accounts

Accounts deemed uncollectible and therefore removed from the accounts receivable balance in the financial statements.