Two Bonds Have the Same Maturity, Risk Rating, and Face

question 44

True/False

Two bonds have the same maturity, risk rating, and face value, but have different coupon rates. The bond with a lower coupon rate will have a longer duration.

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Definitions:

Budgetary Slack

The intentional underestimation of revenues and/or overestimation of expenses in a budget to create the appearance of having less money available than might actually be available.

Padding

The practice of inflating estimates or financial figures to create a buffer for unexpected costs or to create the appearance of greater value.

Static Budget

A fixed budget that does not change or adjust to variations in business activity levels, often used for control purposes in stable environment operations.

Flexible Budget

A budget that adjusts or flexes with changes in the volume or activity level.