What Effect Would a 100 Basis Point Drop in Yield

question 101

Multiple Choice

What effect would a 100 basis point drop in yield have on bond prices?

• A)It would have a larger impact on bond prices when yields are high.
• B)It would have a larger impact on bond prices when yields are low.
• C)It would have the same impact on bond prices regardless of whether yields are high or low.
• D)It would cause bond prices to fall in general.

Evaluate the financial outcomes of upgrading versus disposing of obsolete inventory.

Assess the capacity utilization and its impact on pricing decisions.

Calculate the financial advantages of make versus buy decisions.

Understand the relevance of fixed and variable costs in decision-making.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds, reflected as a charge against its income.

Goodwill Impairment

A decrease in the recorded value of goodwill, indicating it is worth less than its carrying amount on the balance sheet.

FASB ASC

The Financial Accounting Standards Board Accounting Standards Codification, which is the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities.

Quantitative Assessment

The evaluation or measurement of something based on quantity or amounts.