(CMA Adapted, Dec 93 #17) Norton Inc

question 150

Multiple Choice

(CMA adapted, Dec 93 #17) Norton Inc.has a 2 to 1 current ratio.This ratio would increase to more than 2 to 1 if

• A)a previously declared stock dividend were distributed.
• B)the company wrote off an uncollectible receivable.
• C)the company sold merchandise on open account that earned a normal gross margin.
• D)the company purchased inventory on open account.
• E)none of the above.

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Definitions:

Bond Prices

The amount of money at which a bond is trading, which fluctuates based on interest rates, credit quality, and other factors.

Market Interest Rates

The prevailing rates at which borrowers can obtain loans and lenders can invest their funds in the financial markets.

Term Structure

Term Structure relates to the relationship between interest rates or bond yields and different terms or time to maturity, graphically represented as a yield curve.

Down-Sloping

Describes a trend or line on a graph that moves from a higher to a lower point, indicative of a decrease over time.