If You Purchase a Bond That Matures in 5 Years

question 39

Multiple Choice

If you purchase a bond that matures in 5 years but you may have to cash it in before that time,it exposes you to the

• A)credit risk.
• B)default risk.
• C)interest rate risk.
• D)liquidity risk.

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Definitions:

Management Performance Report

A document that evaluates and summarizes the effectiveness and efficiency of a company's management in achieving corporate objectives.

Controllable Fixed Costs

Fixed costs that management has the authority to increase or decrease, such as advertising expenses or research and development costs.

Contribution Margin

The amount by which a product’s selling price exceeds its variable costs, indicating how much contributes to covering fixed costs and generating profit.

Cost Center

A department or unit within an organization that does not directly generate revenue but incurs costs, used for budgeting and cost control.