Which of the Following Bonds Has the Greatest Interest Rate

question 108

Multiple Choice

Which of the following bonds has the greatest interest rate price risk?

• A) a 10-year, $1,000 face value, zero coupon bond.
• B) a 10-year, $1,000 face value, 10% coupon bond with annual interest payments.
• C) all 10-year bonds have the same price risk since they have the same maturity.
• D) a 10-year, $1,000 face value, 10% coupon bond with semiannual interest payments.
• E) a 10-year $100 annuity.

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Definitions:

Support Department Costs

Costs associated with the departments that provide essential services to other operational departments within a company but do not directly generate revenue.

Products

Products are goods or services that are created or provided by businesses and made available to consumers for purchase or consumption.

Plantwide Overhead

The total of all overhead costs for a manufacturing plant, which may be allocated to products based on a predefined rate or method.

Product Costs

Costs that are directly associated with the manufacturing of goods, including raw materials, labor, and overhead expenses.