Bonds Whose Term to Maturity Is Shorter Than the Holding

question 67

Multiple Choice

Bonds whose term to maturity is shorter than the holding period are also subject to

• A) default.
• B) reinvestment risk.
• C) both of the above.
• D) none of the above.

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Definitions:

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been subtracted from revenue.

Depreciation

A method of allocating the cost of a tangible asset over its useful life.

Indirect Method

A method of presenting the cash flow statement where net income is adjusted for non-cash transactions and changes in working capital to arrive at cash flow from operating activities.

Net Income

The net earnings of a company once all costs and taxes are subtracted from the total income.