Which of the Following Is True About Bonds

question 6

Multiple Choice

Which of the following is true about bonds?

• A) They are obligations from the investor to the corporation.
• B) Their interest rate always varies with the Consumer Price Index
• C) They have a fixed maturity, and they pay an amount equal to the maturity value times the coupon rate each year.
• D) At maturity of the bond, the investor receives the market price of the bond.

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Definitions:

Residual Value

The estimated amount that an asset will be worth at the end of its useful life, often used in calculating depreciation and lease payments.

Straight-Line Method

The Straight-Line Method is a way of allocating the cost of an asset evenly over its useful life, commonly used in depreciation and amortization calculations.

Depreciation

The methodical distribution of a physical asset's cost over its expected lifespan, representing deterioration or becoming outdated.

Depletion Expense

The allocation of the cost of natural resources over the period they are consumed.