A Cost That Remains Constant Over a Limited Range of Volume

question 91

Multiple Choice

A cost that remains constant over a limited range of volume, but increases by a lump sum when volume increases beyond a maximum amount, is a(n) :

• A) Step-wise cost.
• B) Fixed cost.
• C) Curvilinear cost.
• D) Incremental cost.
• E) Opportunity cost.

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Definitions:

Coupon Rate

The interest rate specified on a bond or other fixed income security that the issuer promises to pay to the holder until maturity.

Current Yield

is the annual income (interest or dividends) divided by the current price of the security, used to assess the return of an investment.

Market Price

The prevailing market price for an asset or service available for trade or acquisition.

Semiannual Coupon Rate

The interest rate on a bond or fixed-income security that is paid out to investors twice a year.