Question :
31. A _____ a financial contract in which the borrower and : 1230315
31. A _____ is a financial contract in which the borrower and the lender agree to certain conditions about repayment, operating policies, other borrowing activities while they are outstanding, and other provisions.
A. preferred stock
B. common stock
C. paid-in-capital
D. bond
E. a restriction on retained earnings
32. Which of the following is/are true?
A. A bond indenture refers to the financial contract underlying bonds.
B. Bonds appear on the balance sheet under the title Bonds Payable.
C. Bonds typically carry maturity dates longer than approximately ten years .
D. Bonds typically involve many lenders instead of a single lender.
E. all of the above
33. Which of the following is/are not true?
A. A bond indenture refers to the financial contract underlying bonds.
B. Bonds appear on the balance sheet under the title Bonds Payable.
C. Bonds typically carry maturity dates longer than approximately ten years .
D. Bonds typically involve many lenders instead of a single lender.
E. Firms need not disclose a list of their long-term debt obligations in notes to the financial statements.
34. Which of the following is/are not true regarding specific bond provisions?
A. Firms might issue bonds based only on their credit worthiness as an entity.
B. Particular collateral might back up bonds issued by a firm.
C. Unsecured borrowing might carry senior rights or subordinated rights in the event of bankruptcy.
D. Senior debt holders have a higher priority for payment in the event of bankruptcy than subordinated (junior) unsecured lenders.
E. Common stockholders have a higher priority than unsecured bondholders for payment in the event of bankruptcy.
35. A zero coupon bond provides for _____ periodic payments of interest while the bond is outstanding; and the bond requires payment of all _____ at maturity.
A. six month; principal
B. no; principal and interest
C. annual; principal
D. monthly; principal
E. none of the above
36. A _____ bond requires periodic payments of interest plus a portion of the principal throughout the life of the bond.
A. convertible
B. callable
C. zero coupon
D. serial
E. debenture
37. Some bonds are _____, which means the issuing firm has the right to repurchase the bonds prior to maturity at a specified price.
A. convertible
B. callable
C. zero coupon
D. serial
E. debentures
38. Investors in bonds sometimes hold a _____ option, meaning they can force the issuing company to repay the bonds prior to maturity under specified contractual conditions.
A. convertible
B. call
C. put
D. serial
E. short-term
39. Investors in bonds might exercise a _____ option if interest rates increase, and investors can reinvest the cash proceeds in debt securities with a higher yield.
A. convertible
B. call
C. put
D. serial
E. short-term
40. The typical _____ bond pays interest periodically, usually every six months, during the life of the bond and repays the principal amount borrowed at maturity.
A. derivative
B. multi-coupon
C. zero coupon
D. serial
E. debenture
