Which of the Following Statements Is True

question 77

Multiple Choice

Which of the following statements is true?

• A) Investment grade bonds are those rated single B and higher.
• B) Federal laws typically allow insurance companies and pension funds to purchase non-investment grade bonds.
• C) Because investors are risk averse, they require a premium to purchase a security that exposes them to default risk.
• D) All else equal, the higher a bond's rating the higher the coupon rate.

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Definitions:

Consolidated Financial Statements

These statements combine the financial information of a parent company and its subsidiaries, presenting the financial performance and position as if they were a single entity.

Impairment

The decrease in the recoverable value of an asset below its carrying amount, leading to a write-down value in the balance sheet.

Amortization Expense

Amortization expense is the cost associated with gradually writing off the initial cost of an intangible asset over its useful life.

Capital Asset

Long-term property or investment held by a business or individual, intended for use or investment purposes rather than for sale.