Reference no: EM131844060
1. If a bond has a make-whole call provision, the:
a. Call premium is called off.
b. Bondholder will receive no additional amount.
c. Bondholder will receive the face value amount minus any interest paid to date if the bond is called.
d. Call price will increase as interest rates decrease.
2. Firms may prefer to issue cumulative preferred stock rather than debt for which reason
a. If there is no current taxable income, preferred stock dividends are automatically voided.
b. Preferred stock has no voting rights.
c. Preferred dividends provide a tax shield but debt never does.
d. Corporate investors can receive a tax break on dividends but not on interest.
e. Dividend payments are a tax liability.