Interest bonds are required to pay interest only when the company has sufficient interest income to pay for the bonds. There will be no risk of default if the company does not have sufficient to pay.
Hence, correct option is “C. Income bonds pay interest only when the firm has sufficient income to cover the interest payments. Thus, these securities cannot bankrupt a company and this makes them risked to investors than regular bonds.”
Which of the following is correct? A. Once a firm declares bankruptcy, it is liquidated by...
. oWhich of the following statements is CORRECT O a other things held constant, a callable bond should have a lower yield to matunity than a ncncallable bond O b. Once a firm declares bankruptcy, it must be liquidated by the trustee, who uses the proceeds to pay bondholders, unpaid wages, taxes, and legal fees 10. O 11. Od. O d income bo s must pay interest only ส the compare erns the nterest. Thus the e scurtes cannot ba...
1st blank options = par value, coupon payment, price 2nd blank options = bankruptcy, default, liquidation 3rd blank options = convertible provision, sinking fund provision, call provision 4th blank options= call provision, call premium, convertibility provision 5th blank options = floating-rate, fixed-rate 6th blank options = indenture, trustee, debenture 7th = multiple choice 1. Characteristics of bonds To be effective issuing and investing in bonds, knowledge of their terminology, characteristics, and features is essential. For example: • A bond's_ par...
22. Which of the following statements concerning preferred stocks is true? a. Preferred stockholders have anrior claim on the income and assets of the firm as compared to the claims of lenders. b. Preferred stock dividends per share are normally increased as the earnings of the firm increase. c. Preferred dividends per share are usually not cut or suspended unless the firm is faced with serious financial problems. d. The par value of a stock is always the same as...
Which of the following statements is CORRECT about repayment provisions of bonds? A) The issuer of a callable bond will exercise the call option when the market interest rate exceeds the coupon rate of the bond. B) A convertible bond generally pays a higher coupon rate than an identical non-convertible bond. C) Bonds with a sinking funds provision can be paid back later than their maturity date. D) Holders of a convertible bond should exercise the conversion option when the...
Chapter 9 Homework Assignment 1) A written promise to repay a loan principal plus interest at a specific future date is A) a promissory note. B) a line of credit. C) commercial paper. D) a product warranty. E) a returnable deposit. 2) ________ are subject to redemption before maturity at the option of the issuer. A) Debentures B) Mortgage bonds C) Callable bonds D) Sinking fund bonds E) Convertible bonds 3) Convertible bonds are attractive to investors because A) the...
Which of the following statements is most CORRECT? a. Federal bankruptcy law deals only with corporate bankruptcies. Municipal and personal bankruptcy are governed solely by state laws. b. All bankruptcy petitions are filed by creditors seeking to protect their claims against firms in financial distress. Thus, all bankruptcy petitions are involuntary as viewed from the perspective of the firm's management. c. Chapters 11 and 7 are the most important bankruptcy chapters for financial management purposes. If a reorganization plan cannot...
Please help this is for a grade! Thank you Fixed-income securities consist of debt instruments and preferred stock. Bonds are debt securities in which a borrower promises to pay a specified interest rate and principal at a future date. The entity that promises to make the interest and maturity payments for a bond issue is called the Based on the information given in the following statement, answer the questions that follow: In July 2009, Hungary successfully issued 1 billion euros...
Which of the following statements is CORRECT? a. The market price of a bond will always approach its par value as its maturity date approaches, provided the bond’s required return remains constant. b. If the Federal Reserve unexpectedly announces that it expects inflation to increase, then we would probably observe an immediate increase in bond prices. c. The total yield on a bond is derived from dividends plus changes in the price of the bond. d. Bonds are generally regarded...
I just need the answers here, no explainations Q6 a) Which of the following reasons would cause a firm to want its share price to rise? The firm's employees hold company shares due to a company stock purchase plan and a increase in share price would positively affect morale. A higher share price would make the firm less likely to be a takeover target. If the firm wants to issue new shares, a higher share price means that the firm has...
Which of the following statements is correct? Multiple Choice There are almost always small differences between the stated rate and the market rate when bonds are issued. The market rate of interest has no bearing on the selling price of the bonds. If the stated rate of interest on a bond is equal to the market rate of interest, then the bond will sell at a premium price. ooo The market rate of interest refers to the interest rate that...