Other Things Being Equal, the Higher the Interest Rate, the ______

question 133

Multiple Choice

Other things being equal, the higher the interest rate, the ______ the price of a bond.

• A) same
• B) cannot be determined
• C) higher
• D) lower

---

Definitions:

Modified Accelerated Cost Recovery System (MACRS)

A method of depreciation applied in the United States that allows for faster write-offs of assets to encourage investment.

Class Life

The expected useful lifetime of a fixed asset, which determines the depreciation rate for tax and accounting purposes.

Depreciation

The accounting process of allocating the cost of a tangible asset over its useful life to reflect its decrease in value over time.

After-Tax Cash Flow

After-tax cash flow is the net cash flow generated from business activities after accounting for taxes, indicating the actual cash a company has on hand after tax obligations.