When the Interest Rate Rises, Bond Values

question 162

Multiple Choice

When the interest rate rises, bond values

• A) rise.
• B) fall.
• C) are unchanged because the interest rate paid on a bond is fixed.
• D) will either increase or decrease depending on the type of bond.

---

Definitions:

Expected Cash Collections

The projected amount of money a company anticipates receiving from customers in a future period, based on sales and credit terms.

Selling And Administrative Expense

Costs related to the selling of products and the management of the company, excluding production costs.

Merchandise Purchases Cost

is the total cost associated with buying inventory for resale, including the purchase price, shipping, and handling fees.

Budgeted Cost

An estimated amount set aside for expenditures in the budgeting process, serving as a financial guideline for spending.