One of the Basic Relationships in Interest Rate Theory Is

question 26

Multiple Choice

One of the basic relationships in interest rate theory is that,other things held constant,for a given change in the required rate of return,the ____ the time to maturity,the ____ the change in price.

• A) longer;smaller
• B) shorter;larger
• C) longer;greater
• D) shorter;smaller
• E) Answers c and d are both correct.

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Definitions:

Recognized Gain

An increase in the value of an asset that has been sold or deemed to have increased in value officially on financial statements.

Selling Price

The amount for which a product or service is sold, not necessarily equal to the cost or intrinsic value of the item.

Carrying Value

The book value of an asset or liability on a company's balance sheet, calculated as the original cost minus depreciation or amortization.

Intra-Entity Inventory Sales

Sales transactions of inventory between divisions or subsidiaries within the same parent company, not affecting consolidated financial results until sold externally.