Which of the Following Statements Is CORRECT

question 86

Multiple Choice

Which of the following statements is CORRECT?

• A) all else equal, long-term bonds have less interest rate price risk than short-term bonds.
• B) all else equal, low-coupon bonds have less interest rate price risk than high-coupon bonds.
• C) all else equal, short-term bonds have less reinvestment rate risk than long-term bonds.
• D) all else equal, long-term bonds have less reinvestment rate risk than short-term bonds.
• E) all else equal, high-coupon bonds have less reinvestment rate risk than low-coupon bonds.

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Definitions:

FUTA Payable

The amount owed by employers for the Federal Unemployment Tax Act, a federal tax used to help fund state workforce agencies.

FUTA Expense

The total cost incurred by an employer for the Federal Unemployment Tax, contributing to the U.S. government's unemployment fund.

Form 941

A federal tax form used by employers to report quarterly income taxes, social security tax, and Medicare tax withheld from employees' paychecks.

Form 940

A tax form filed by employers to report annual Federal Unemployment Tax Act (FUTA) tax.