Reference no: EM132488204

True or False

Question 1. ____ Zero coupon bonds are so named because companies do not record interest expense on them.

Question 2. ____ One advantage of debt financing is that interest is tax deductible.

Question 3. ____ A company's creditors can force it into bankruptcy if it can't pay its debts.

Question 4. ____ Banks typically charge stronger companies higher interest rates than weaker ones because the strong companies can better afford it.

Question 5. ____ Financial leverage refers to a company's ability to pay its debts off early, avoiding interest payments.

Question 6. ____ Debt covenants exist to product the creditor.

Question 7. ____ When a company issues a bond between interest dates, the first interest payment will be lower.

Question 8. ____ Companies must use the effective interest rate method to compute and record interest.

Question 9. ____ A debenture is a debt that is not secured.

Question 10. ____ The maturity value of a bond is amount that the company will need to repay.