Which One of the Following Bonds Is Most Apt to Have

question 8

Multiple Choice

Which one of the following bonds is most apt to have the smallest liquidity premium?

• A)Treasury bill
• B)Corporate bond issued by a new firm
• C)Municipal bond issued by the State of New York
• D)Municipal bond issued by a rural city in Alaska
• E)Corporate bond issued by General Motors (GM)

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Definitions:

Mixed Cost

A cost that contains both variable and fixed cost elements, changing in total with activity level but not proportionately.

Manufacturing Cost

The total cost incurred by a company to produce goods, including direct materials, direct labor, and manufacturing overhead expenses.

Cost Behavior Analysis

The study of how specific costs respond to changes in the level of business activity.

Activity Base

A measure used in costing that is a significant and quantifiable activity or event, determining the cost incurred by an activity.