Which of the Following Set of Conditions Will Result in a Bond

question 9

Multiple Choice

Which of the following set of conditions will result in a bond with the greatest price volatility?

• A) A high coupon and a short maturity.
• B) A high coupon and a long maturity.
• C) A low coupon and a short maturity.
• D) A low coupon and a long maturity.

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Definitions:

Net Income

The amount of money left after all expenses, taxes, and costs have been subtracted from total revenue, indicating the profit earned by a company.

Indirect Method

A cash flow statement preparation method that adjusts net income for the changes in balance sheet accounts to calculate the cash from operating activities.

Depreciation

The methodical distribution of a physical asset's cost across its lifetime, reflecting the asset's depreciation, wear, and eventual obsolescence.

Fixed Assets

Long-term tangible assets, such as buildings, machinery, and equipment, used in the operations of a business and not intended for resale.