When the corporation issuing the bonds has the right to

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Reference no: EM13482145

1. one potential advantage of financing corportations through the use of bonds rather than common stock is

a.the interest on bonds must be paid when due
b.the corporation must pay the bonds at maturity
c.the interest expense is deductable for tax purposes by the corporation
d.a higher earnings per share is guarenteed for existing common shareholders

2. when the corporation issuing the bonds has the right to repurchase the bonds prior to the maturity date for a specific price, the bonds are

a. convertible bonds
b.unsecured bonds
c.debenture bonds
d.callable bonds

3. the present value of $30,000 to be received in 2 years, at 12% compounded annually is (rounded to nearest dollar)

a. $23,916
b.$37,632
c.23,700
d.30,000

4. An unsecured bons is the same as a

a. debenture bond
b. zero coupon bond
c. term bond
d. bond indenture

5. if $1,000,000 of 8% bonds are issued at 102 1/2, the amount of cash recieved from the sale is

a.$1,080,000
b.$975,000
c.$1,000,000
d.$1,025,000

Reference no: EM13482145

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