We Would Expect the Interest Rate on Bond a to Be

question 61

Multiple Choice

We would expect the interest rate on Bond A to be lower than the interest rate on Bond B if the two bonds have identical characteristics except that

• A)the credit risk associated with Bond A is lower than the credit risk associated with Bond B.
• B)Bond A was issued by the Apple corporation and Bond B was issued by the city of Houston.
• C)Bond A has a term of 20 years and Bond B has a term of 2 years.
• D)All of the above are correct.

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Definitions:

Net Income

The income a business retains following the deduction of all expenses, taxes, and costs from its overall revenue.

Total Assets

A corporation's complete asset portfolio, which includes both current assets and assets held for a longer period.

Post-Closing Trial Balance

A list of all accounts and their balances after the closing entries have been made, ensuring that debits equal credits in preparation for the next accounting period.

Temporary Accounts

Accounts that are closed at the end of the accounting year, including income, expense, and withdrawal accounts, to prepare the company for the new fiscal year.