Question

The period of time for which the interest is calculated is called the
A.Market period
B.Cooling period
C.Conversion period
D.None of the above

Answer 1

Hint: First, we will consider each option separately to compare the meanings with the given statement, where market period is a period of time in which at all inputs in the production process are fixed, cooling period is an agreed period of time during which two sides with opposing views try to resolve a dispute and conversion period is a period of time during which a convertible security may be exchanged for common stock.

Complete step-by-step answer:
We are given that period of time for which the interest is calculated.
Considering option A, we know that the market period is a period of time in which all inputs in the production process are fixed, meaning the quantity of the outfit itself is fixed.
Thus, option A is incorrect.
Considering option B, we also know that a cooling period is an agreed period of time during which two sides with opposing views try to resolve a dispute before taking any serious action.
Considering option C, we know that a conversion period is a period of time during which a convertible security may be exchanged for common stock.
The length of the conversion period depends upon the particular security; sometimes it lasts until maturity and sometimes it expires.
Since we have that the period of time for which the interest is calculated is called the conversion period.
Hence, option C is correct.

Note: In solving this question, we need to have the knowledge about the meaning of market period, cooling period and conversion period. Then only we can answer this question.