Two of the Primary Differences Between a Corporate Bond and a Treasury

question 16

Multiple Choice

Two of the primary differences between a corporate bond and a Treasury bond with identical maturity dates are related to

• A)interest rate risk and time value of money.
• B)time value of money and inflation.
• C)taxes and potential default.
• D)taxes and inflation.
• E)inflation and interest rate risk.

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Definitions:

Current Assets

Resources anticipated to be transformed into cash, sold, or utilized within a year or during the standard operational cycle of the company.

Fiscal Year

A one-year period that companies and governments use for accounting purposes and preparing financial statements, which may not align with the calendar year.

Natural Business Year

A fiscal year that ends when business activities have reached the lowest point in an annual operating cycle.

Formal Accounting Records

Official documents and books that systematically record financial transactions and positions of a business.