If the Interest Rates on All Bonds Rise from 5

question 29

Multiple Choice

If the interest rates on all bonds rise from 5 to 6 percent over the course of the year,which bond would you prefer to have been holding?

• A) A bond with one year to maturity
• B) A bond with five years to maturity
• C) A bond with ten years to maturity
• D) A bond with twenty years to maturity

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Definitions:

Related Revenue

The income generated from activities that are directly related to the main business operations.

Accrued Expenses

Expenses that have been incurred but not yet paid or recorded, to be recognized in the accounting period they are incurred.

Asset Account

An asset account is a category within a company's general ledger that shows the value of all owned assets that have economic value and can provide future benefits.

Incurred

Expenses or losses that have been realized or taken on, typically reflecting costs associated with the operation of a business.