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- Decide whether the statement is true or false: Both bond holders and common shareholders are subject to financial risk True False______________ allows the investor to transform debt into equity under certain circumstances. a. Equity shares b. Non-convertible bonds c. Equity debentures d. Convertible bondWhich of the following fixed income securities has the highest level of risk? Which one has the highest level of liquidity? a. treasury bonds b. agency bonds c. corporate bonds d. municipal bonds
- Which of the following is not a capital market instrument? a. Corporate stock b. Mortgages c. Corporate bonds d. Repurchase agreementWhich of the following types of debt securities protect investors against interest rate risk? a. extendible notes b. floating rate bonds c. floating rate bonds and extendible notes d. original issue deep discount bondsProtective covenants protect: Group of answer choices A. the investor from interest rate risk. B. the company in case of default. C. bond investors from adverse actions by the company. D. bond investors whose bonds are called by the company.
- a. Explain what a corporate bond isb. Outline the characteristics of the bond marketd. Explain the benefits of issuing bonds to raise financingwhich of the following instrument are traded in capital market. check all that apply A. commercial paper b. treasury bills c. cooperate bonds d. bankers appectances e. common stockWhich of the following is not a primary source of corporate debt financing? a. Bonds. b. Notes. c. Leases. d. Receivables.
- (I) Capital market securities fall into two categories: bonds and stocks. (II) Long-termbonds include government bonds and long-term notes, municipal bonds, and corporate bonds.a) (I) is true, (II) false.b) (I) is false, (II) true.c) Both are true.d) Both are falseWhich 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.A. Provide brief explanations/definitions for each of the following:Tracking error, Asset Swaps, Liquidity Theory of the Term Structure, Contraction Risk. B. Why would a corporation elect to raise funds via a securitization rather than a corporate bond?