Which of the Following Statements Is Correct

question 51

Multiple Choice

Which of the following statements is correct?

• A) The farther the bond's term is from its maturity, the farther the price is from its face value.
• B) The closer the bond's term is to its maturity, the farther the price is from its face value.
• C) The farther the bond's term is to its maturity, the closer the price is to its face value.
• D) The closer the bond's term is to its maturity, the closer the price is to its face value.

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Definitions:

Income Tax Expense

The total amount of income tax a company is obligated to pay to the government, reported as an expense in the income statement.

Income Tax Rate

The percentage at which an individual or corporation is taxed on their income, which can vary based on income level, jurisdiction, and other factors.

After-Tax Discount Rate

A discount rate that has been adjusted for the effect of taxes, utilized in evaluating the net present value (NPV) of an investment after taxes.

Straight-Line Depreciation

A method of calculating the depreciation of an asset where its cost is evenly spread across its useful life.