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general business data bank




Question;39. Each;of the following is correct regarding bonds except;they are;a. a;form of interest-bearing notes payable.;b. attractive;to many investors.;c. issued;by corporations and governmental agencies.;d. sold in large denominations.;40. From the standpoint of the issuing company;a disadvantage of using bonds as a means of long-term financing is that;a. bond interest is deductible for tax purposes.;b. interest must be paid on a periodic basis regardless;of earnings.;c. income to stockholders may increase as a;result of trading on the equity.;d. the bondholders do not have voting rights.;41. If a corporation issued $3,000,000 in bonds;which pay 10% annual interest, what is the annual net cash cost of this;borrowing if the income tax rate is 30%?;a. $3,000,000;b. $90,000;c. $300,000;d. $210,000;42. Secured bonds are bonds that;a. are in the possession of a bank.;b. are registered in the name of the owner.;c. have specific assets of the issuer pledged as;collateral.;d. have detachable interest coupons.;43. A legal document which summarizes the;rights and privileges of bondholders as well as the obligations and commitments;of the issuing company is called;a. a bond indenture.;b. a bond debenture.;c. trading on the equity.;d. a term bond.;44. Stockholders of a company may be reluctant;to finance expansion through issuing more equity because;a. leveraging with debt is always a better idea.;b. their earnings per share may decrease.;c. the price of the stock will automatically;decrease.;d. dividends must be paid on a periodic basis.;45. Which of the following is not an advantage of issuing bonds;instead of common stock?;a. Stockholder control is not affected.;b. Earnings per share on common stock may be;lower.;c. Income to common shareholders may increase.;d. Tax savings result.;46. Bonds that are secured by real estate are;termed;a. mortgage bonds.;b. serial bonds.;c. debentures.;d. bearer bonds.;47. Bonds that mature at a single specified future;date are called;a. coupon bonds.;b. term bonds.;c. serial bonds.;d. debentures.;48. Bonds that may be exchanged for common;stock at the option of the bondholders are called;a. options.;b. stock bonds.;c. convertible bonds.;d. callable bonds.;49. Bonds that are subject to retirement at a;stated dollar amount prior to maturity at the option of the issuer are called;a. callable bonds.;b. early retirement bonds.;c. options.;d. debentures.;50. Investors who receive checks in their names;for interest paid on bonds must hold;a. registered bonds.;b. coupon bonds.;c. bearer bonds.;d. direct bonds.;51. A bondholder that sends in a coupon to;receive interest payments must have a(n);a. unsecured bond.;b. bearer bond.;c. mortgage bond.;d. serial bond.;52. Bonds that are not registered are;a. bearer bonds.;b. debentures.;c. registered bonds.;d. transportable bonds.;53. Bonds that are issued in the name of the;owner are;a. coupon bonds.;b. bearer bonds.;c. serial bonds.;d. registered bonds.;54. Corporations are granted the power to issue;bonds through;a. tax laws.;b. state laws.;c. federal security laws.;d. bond debentures.;55. The party who has the right to exercise a;call option on bonds is the;a. investment banker.;b. bondholder.;c. bearer.;d. issuer.;56. A major;disadvantage resulting from the use of bonds is that;a. earnings;per share may be lowered.;b. interest;must be paid on a periodic basis.;c. bondholders;have voting rights.;d. taxes may increase.;57. Bonds will always fall into all but which;one of the following categories?;a. Callable or convertible;b. Term or serial;c. Registered or bearer;d. Secured or unsecured;58. Which of the following statements;concerning bonds is not a true;statement?;a. Bonds are generally sold through an investment;company.;b. The bond indenture is prepared after the;bonds are printed.;c. The bond indenture and bond certificate are;separate documents.;d. The trustee keeps records of each bondholder.;59. A bond trustee does not;a. issue the bonds.;b. keep a record of each bondholder.;c. hold conditional title to pledged property.;d. maintain custody of unsold bonds.;60. The contractual interest rate is always;stated as a(n);a. monthly rate.;b. daily rate.;c. semiannual rate.;d. annual rate.


Paper#45014 | Written in 18-Jul-2015

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