Which of the Following Is a True Statement About the Relationship

question 167

Multiple Choice

Which of the following is a true statement about the relationship between the price of bonds and the interest rate?

• A) The prices of bonds are directly related to the interest rate.
• B) The prices of bonds increase when the interest rates rise.
• C) The prices of bonds are unrelated to the interest rate.
• D) The prices of bonds are inversely related to the interest rate.

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Definitions:

Valuation Rate

A rate used to estimate the current value of cash flows or assets, often used in the appraisal of businesses.

Market Value

Market value is the price at which an asset would trade in a competitive auction setting, reflecting its worth in the current market.

Gross Income

The total income earned before any deductions or taxes are applied.

Standard Deduction

The fixed amount the IRS allows taxpayers to subtract from their taxable income if they do not itemize deductions, differing by filing status.