The Price of a Bond

question 17

Multiple Choice

The price of a bond:

• A) is related to nothing. It is arbitrarily set by the corporation's Treasurer and Board of Director based on their need for profit the day the bonds are issued.
• B) is inversely related to the market-required yield
• C) in not a reflection of the market as a whole
• D) increases (higher yields)and leads to an increase in the quantity demanded

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Definitions:

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs for raw materials or labor.

Fixed Costs

Fixed Costs are business expenses that do not change with the level of goods or services produced by the company.

Marginal Cost

The additional cost incurred by producing one more unit of a good or service.

Total Variable Cost

The total of all variable expenses which change with the level of output.