A bond backed by the future potential earnings and credit rating of the company is called a Group of answer choices A)debenture bond b)serial bond c)term bond d)convertible bond E)None of the above
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Q: convertible bond
A: Correct Answer :- B Convertible Bond
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Q: Which of the following statements is most correct? Group of answer choices A debenture is a secured…
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- Martin Bowman is preparing a report distinguishing traditional debt securities from structured note securities. Discuss how the following structured note securities differ from a traditional debt security with respect to coupon and principal payments:a. Equity index-linked notes.b. Commodity-linked bear bond.Identify the following as either an advantage (A) or a disadvantage (D) of bond financing for a company. Bonds require payment of par value at maturity.Nominal interest rate of a corporate bond includes all of the following components EXCEPT _____. Group of answer choices a. real risk-free interest rate b. expected inflation c. unexpected inflation d. credit risk premium
- Which of the following is correct? A. Bonds maturing at a specified single date are called ordinary bonds. B. Equity securities and debt securities differ only in their effect on a company’s cash flow. C. One purpose in holding bonds as a long-term investment is to provide the investor a voting voice in the management of the issuing company. C. On bonds, the yield rate and the nominal rate of interest are always different.What is a convertible bond? If a company decidesto raise capital by issuing convertible bonds, howwould the terms on the bond be set? Considerspecifically the maturity, coupon rate, and callfeatures of the bond, as well as the conversionprice (or conversion ratio), together with any otherparameters required for the analysis.Which is not considered in bond valuation?a. The required rate of return of the investors which considers all risk factors and opportunity costs.b. The streams of future cash flows that would include the interest and maturity value.c. The maturity or the term of the bond.d. The date of issuance for the bond and the publication for the public offering.e. All of the abovef. None of the above
- Which of the following statements is CORRECT? Group of answer choices The bond-yield-plus-risk-premium approach to estimating the cost of common equity involves adding a risk premium to the interest rate on the company’s own long-term bonds. The size of the risk premium for bonds with different ratings is published daily in The Wall Street Journal or is available online. The WACC is calculated using a before-tax cost for debt that is equal to the interest rate that must be paid on new debt, along with the after-tax costs for common stock and for preferred stock if it is used. An increase in the risk-free rate is likely to reduce the marginal costs of both debt and equity. The relevant WACC can change depending on the amount of funds a firm raises during a given year. Moreover, the WACC at each level of funds raised is a weighted average of the marginal costs of each capital component, with the weights based on the firm’s target capital structure. Beta measures market risk,…Which factor(s) lead to the difference of the interest between T-bill and a short-term corporate bond? Group of answer choices a)Inflation rate b)Default risk and maturity risk c)Maturity risk d)Default riskThe nominal interest rate of a corporate bond includes all of the following components EXCEPT _____. Group of answer choices real risk-free interest rate expected inflation unexpected inflation credit risk premium
- From page 9-2 of the VLN, what is the first thing you want to identify when approaching a bond problem? Group of answer choices A. Annual bond or semiannual bond B. Whether the market rate is different from the stated rate. C. The cash flows provided by the bond. D. The company's debt to equity ratio.Which of the following statements is most correct? Group of answer choices A debenture is a secured bond that is backed by some or all of the firm’s fixed assets. Junk bonds typically have a lower yield to maturity relative to investment grade bonds. Subordinated debt has more default risk than senior debt. All of the statements above are correct. None of the statements above is correct.Explain how an investor in a BB+ rated corporate bond might benefit from the issuing company's strong current and future earnings even though the bond's coupon is fixed.