Which of the Following Are Generally True of All Bonds

question 89

Multiple Choice

Which of the following are generally true of all bonds?

• A) The only bond whose return equals the initial yield to maturity is one whose time to maturity is the same as the holding period.
• B) A rise in interest rates is associated with a fall in bond prices, resulting in capital losses on bonds whose term to maturities are longer than the holding period.
• C) The longer a bond's maturity, the greater is the price change associated with a given interest rate change.
• D) All of the above are true.
• E) Only A and B of the above are true.

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Definitions:

Return on Assets

A profitability ratio indicating the efficiency with which a company uses its assets to generate net income, calculated by dividing net income by total assets.

Return on Equity

A financial ratio that measures the profitability of a company in relation to shareholders' equity, indicating how effectively equity supports operations and growth.

Earnings Per Share

A measure of a company's profitability calculated by dividing its net income by the number of outstanding shares of its common stock.

Net Profit Margin Ratio

A profitability ratio calculated by dividing net income by net sales, showing how much profit a company makes for every dollar of its sales.