What is a bond? A. It is a security that represents partial ownership in a business. B. It is a security that represents the debt of a government or a business that promises to pay a fixed amount. C. It is a security that represents the equity of a government or a business that promises to pay a fixed interest. D. None of the above

Identify the following as either an advantage (A) or a disadvantage (D) of bond financing for a company. Bonds do not affect owner control.

Which of the following is incorrect about debt financing? A. Debt financing always generates excess returns which benefits equity investors b. One benefit of debt financing is that interest on most debt is fixed c. One benefit of debt financing is that interest is a tax deductible expense d. It increases financial leverage

Which of the following is a disadvantage to a corporation issuing bonds? Group of answer choices A)The required interest payment must be met each period. B)The liquid nature of the bonds makes them attractive to investors who may not want to hold them to maturity. c)The large principal payment due at maturity. d)Both the first and third answers above are both disadvantages. e)The first, second and third answers above are all disadvantages.

when are corporations likely they called the Bonds? A.  When the market interest rate is higher than the contract rate, b. When the contract rate is higher than the market rate. C. When their bonds at selling at par with market d. When standard and poor are bullish about treasury bills E. None of the above

To be effective issuing and investing in bonds, knowledge of their terminology, characteristics, and features is essential. For example: • A bond’s    refers to the interest payment or payments paid by a bond. • A bond issuer is said to be in    if it does not pay the interest or the principal in accordance with the terms of the indenture agreement or if it violates one or more of the issue’s restrictive covenants. • The contract that describes the terms of a borrowing arrangement between a firm that sells a bond issue and the investors who purchase the bonds is called    . • A bond’s    gives the issuer the right to call, or redeem, a bond at specific times and under specific conditions.   Suppose you read an article about the Golden Gate Bridge and Highway District bonds. It includes the following information: Bridge Bonds Series A Dated 7-15-2005 4.375% Due 7-15-2055 @100.00   What is the issuing date of this bond? 7-15-2005   7-15-2055…

27. If a long-term bonds becomes callable due to the violation of a debt covenant Group of answer choices a. The debt may continue to be classified as long term if the entity believes the covenant can be renegotiated. b. The debt must be reclassified as current. c. Cash must be reserved to pay the debt. d. Retained earnings must be restricted in the amount of the debt.

What is a bond? Why might a company elect to sell bonds rather than borrow from a bank?

Please solve this practice problem.

6. Which of the following is true of secondary securities? a) They include equities, bonds, and other debt claimsb) They are backed by the real assets of corporations issuing them c) They are securities that back primary securitiesd) They are securities issued by FIs