Will an Increase in Inflation Have a Larger Impact on the Price

question 23

Multiple Choice

Will an increase in inflation have a larger impact on the price of a bond or preferred stock?

• A) The bond.
• B) The preferred stock.
• C) The impact will be the same.
• D) Inflation doesn't affect either the bond or the preferred stock price.

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Definitions:

Operating Cycle

The average period of time required for a business to convert its investments in inventory back into cash through the process of producing goods, selling them, and collecting revenue from customers.

Cash Cycle

The period between the outlay of cash for the purchase of inventory and the collection of cash from customers in a business operation, reflecting the liquidity and efficiency of the company.

Cash Cycle

The duration between the outlay of cash to produce goods or services and the collection of cash from sales.

Inventory Period

The average time that goods remain in inventory before being sold, a measure of inventory management efficiency.