Which of the Following Statements Is Most Correct

question 92

Multiple Choice

Which of the following statements is most correct?

• A) If a bond's yield to maturity exceeds its coupon rate,the bond's current yield must also exceed its coupon rate.
• B) If a bond's yield to maturity exceeds its coupon rate,the bond's price must be less than its maturity value.
• C) If two bonds have the same maturity,the same yield to maturity,and the same level of risk,the bonds should sell for the same price regardless of the bond's coupon rate.
• D) Answers b and c are both correct.
• E) None of the above answers is correct.

Apply the concept of sunk costs to financial decisions.

Analyze sell or process further decisions.

Evaluate the financial implications of replacing equipment.

Understand the impact of fixed and variable costs on product line decisions.

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Definitions:

Fixed Costs

Expenses that do not change in the short term regardless of the level of production or sales, such as rent and salaries.

Average Total Cost Curve

A graph that shows the per unit cost of production at various levels of output.

Short-Run

A time period in which at least one factor of production is fixed, limiting the ability of firms to adjust to changes in market conditions fully.

Marginal Cost Curve

A graphical representation that shows the change in total cost when an additional unit is produced; typically upward-sloping due to increasing marginal costs.