Which of the Following Statements Is Correct

question 104

Multiple Choice

Which of the following statements is correct?

• A) There is no relationship between the length of time remaining until a bond's maturity and the closeness of the price to 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:

Current Ratio

A liquidity ratio that measures a company's ability to cover its short-term obligations with its short-term assets.

Liquidity

The ease with which an asset or security can be converted into cash without affecting its market price.

Short-term Debt

Borrowings that are due for repayment within one year.

Common Size Analysis

A financial analysis technique that converts each line item of financial statements into a percentage of a base figure for easy comparison.