A debenture is ________. Group of answer choices A. a bond with assets such as land to back their word that they will pay it back B. the interest paid on a bond C. a type of bond that can be sold back to the issuing company whenever the bondholder wishes D. a bond with only the company's word that they will pay it back

A debenture is ________. Group of answer choices A. a bond with assets such as land to back their word that they will pay it back B. the interest paid on a bond C. a type of bond that can be sold back to the issuing company whenever the bondholder wishes D. a bond with only the company's word that they will pay it back

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 2MC: A debenture is ________. A. the interest paid on a bond B. a type of bond that can be sold back to...

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A debenture is ________.A. the interest paid on a bondB. a type of bond that can be sold back to the issuing company whenever the bondholder wishesC. a bond with only the company’s word that they will pay it backD. a bond with assets such as land to back their word that they will pay it back
Select the description that best fits each term or phrase. A. Records and tracks the bondholders’ names. B. Is unsecured; backed only by the issuer’s credit standing. C. Has varying maturity dates for amounts owed. D. The legal contract between the issuer and the bondholders. E. Can be exchanged for shares of the issuer’s stock. F. Is unregistered; interest is paid to whoever possesses them. G. Maintains a separate asset account from which bondholders are paid at maturity. H. Pledges specific assets of the issuer as collateral. 1. Registered bond 5. Convertible bond 2. Serial bond 6. Bond indenture 3. Secured bond 7. Sinking fund bond 4. Bearer bond 8. Debenture
A legal document that details the rights of bondholders and the issuer is called . If the legal document just described includes a sinking fund provision, is the bond considered to have more or less default risk, all else being equal? More default risk Less default risk You can distinguish the various types of bonds by their terms of contract, pledge of collateral, and so on. Identify the type of bond based on each description given in the table that follows: Description Type of Bond These bonds are backed by real estate holdings and equipment, and if a company goes bankrupt, the collateral can be sold off to compensate for the default. These bonds, more so than other collateralized securities, have prior claims over assets. These bonds are not backed by any physical collateral. They are backed by the reputation and creditworthiness of the issuing company. These bonds are considered the riskiest of all corporate bonds and thus…
Explain the use of a sinking-fund provision. How can it reduce the investor’s risk? What are protective covenants? Why are they needed? Explain the use of call provisions on bonds. How can a call provision affect the price of a bond? Explain the use of bond collateral, and identify the common types of collateral for bonds. What are debentures? How do they differ from subordinated debentures? What is a bond indenture? What is the function of a trustee with respect to the bond indenture? What are the advantages and disadvantages to a firm that issues low- or zero-coupon bonds?
Bond A is a municipal bond and Bond B is a corporate bond. If you pay a very high tax rate, which bond do you prefer? Select one: a. B b. A c. A=B
A bondissuer is lending money; a bondholder is borrowing money. Select one: True False
1. Anton wants to have a portion of ownership of a certain company. Which of the following should he invest? A. Annuity B. Bonds C. Shares D. Stocks 2. What writtwn contract is exhibited by a debtor that is legally binding which stipulates the amount borrowed at a specified tine in the future? A. Stocks B. Annuity C. Amortization D. Bonds 3. Which of the following covers when the frequency of the regular payment is different from the frequency of interest conversion? A. Bonds B. Ammortilation C. General annuity D. Simple annuity 4. What term is refers to the type of arrangement where composition is important but not order? A. Courting B. Permutation C. Multiplication rulw D. Combination 5. If p q is a tautology, then what can you inter about p and q? A. P and Q are either true or false but not both B. P and Q are always false C. P and Q are always true D. P and Q are either both true or false both false
To be effective issuing and investing in bonds, knowledge of their terminology, characteristics, and features is essential. For example: • A bond’s refers to the interest payment or payments paid by a bond. • A bond issuer is said to be in if it does not pay the interest or the principal in accordance with the terms of the indenture agreement or if it violates one or more of the issue’s restrictive covenants. • The contract that describes the terms of a borrowing arrangement between a firm that sells a bond issue and the investors who purchase the bonds is called . • A bond’s gives the issuer the right to call, or redeem, a bond at specific times and under specific conditions. Suppose you read an article about the Golden Gate Bridge and Highway District bonds. It includes the following information: Bridge Bonds Series A Dated 7-15-2005 4.375% Due 7-15-2055 @100.00 What is the issuing date of this bond? 7-15-2005 7-15-2055…
What is a bond? A. It is a security that represents partial ownership in a business. B. It is a security that represents the debt of a government or a business that promises to pay a fixed amount. C. It is a security that represents the equity of a government or a business that promises to pay a fixed interest. D. None of the above
Which of the following would be included in the journal entry to show the conversion of bonds payable with additional consideration (a 'sweetener ' to encourage bondholders to sell their bond back )? (NIE 13) A debit to conversion expense debit to common stock A debit to cash A debit to bond discount
Which of the following is true regarding a bond? O The issuance must be approved by the board of directors. O The terms are set forth in a legal document called a bond indenture. O The contractual interest rate is also referred to as the stated rate. O All of the answer choices are correct.
Which one of the following statements is correct concerning bond classifications? Select one: a. A mortgage security is a bond issued solely by a home builder. b. A note is a bond which has an original maturity date longer than 10 years. c. A debenture is a long-term bond secured by the fixed assets of a firm. d. A callable bond can be repurchased by the issuer prior to the initial maturity date. e. A subordinated bond receives preferential treatment over all other bonds in a bankruptcy.