Which of the following events would make it more likely that a company would call its outstanding callable bonds? State your reason for the answer. The company’s bonds are downgraded. Market interest rates rise sharply. The company's financial situation deteriorates significantly. Inflation increases significantly. Market interest rates decline sharply

Which of the following events would make it more likely that a company would call its outstanding callable bonds? State your reason for the answer. The company’s bonds are downgraded. Market interest rates rise sharply. The company's financial situation deteriorates significantly. Inflation increases significantly. Market interest rates decline sharply

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 16MCQ

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Which of the following events would make it more likely that a company would choose to call its outstanding callable bonds? 1.Market interest rates decline sharply. 2.The company's bonds are downgraded. 3.Market interest rates rise sharply. 4.Inflation increases significantly. 5.The company's financial situation deteriorates significantly.
Which of the following events would make it more likely that a company would choose to call its outstanding callable bonds? a. Market interest rates rise sharply. b. Market interest rates decline sharply. c. The company's nancial situation deteriorates signicantly. d. Ination increases signicantly. e. The company's bonds are downgraded. Please explain.
Which of the following events would make it more likely that a company would call its outstanding callable bonds? (Ch. 7) Group of answer choices Inflation increases significantly. The company’s bonds are downgraded. Market interest rates rise sharply. The company's financial situation deteriorates significantly. Market interest rates decline sharply.
Which of the following events would make it more likely that a company would choose to call it’s outstanding callable bonds? An increase in market interest rates. An increase in the call premium. All the other statements are correct. The company’s bonds are downgraded. A reduction in market interest rates.
A company has the greatest incentive to call its outstanding callable bonds when: A. Many interest rates rise sharply B. Market interest rates decline sharply C. Inflation increases significantly D. The company's bonds are downgraded (bond ratings decline).
Under which of the following situation, would a firm most likely to call its outstanding callable bonds? Group of answer choices a)The firm has financial distress. b)The company’s bonds are downgraded. c)The market interest rate increases d)The market interest rate declines
Which of the following trends can be unfavorable from the viewpoint of a bondholder? a. The issuing company’s debt ratio is steadily declining.b. The issuing company’s interest coverage ratio is steadily rising.c. Market interest rates are steadily rising. d. The issuing company’s net cash flow from operating activities is steadily increasing.
Which of the following statements is most correct? Why?* choices: a. The expected return on corporate bonds will generally exceed the yield to maturity. b. Firms that are in financial distress are forced to declare bankruptcy. c. All else equal, senior debt will generally have a lower yield to maturity than subordinated debt. d. Statements a and c are correct. e. None of the statements above is correct.
Question 1 Indicate whether each of the following actions will increase or decrease a bondâ€™s yield tomaturity: a. A bondâ€™s price increase. b. The companyâ€™s bonds are downgraded by the rating agencies. c. A change in the bankruptcy code makes it more difficult for bondholders to receivepayments in the event a firm declares bankruptcy. d. The economy enters a recession. Question 2 .If a companyâ€™s beta were to double, would it expected return double? Question 3.Are there conditions under which a firm might be better off if it were to choose a machine with arapid payback rather than one with a larger NPV?
Indicate whether each of the following actions will increase or decrease a bond’s yield tomaturity:a. The bond’s price increases.b. The bond is downgraded by the rating agencies.c. A change in the bankruptcy code makes it more difficult for bondholders to receivepayments in the event the firm declares bankruptcy.d. The economy seems to be shifting from a boom to a recession. Discuss the effects ofthe firm’s credit strength in your answer.e. Investors learn that the bonds are subordinated to another debt issue.
Any of the following incidents will increase the chances of a corporation calling the unpaid callable bonds?a. A decrease in interest rates on the open market.b. The company's shares are lowered in value.c. A higher call premium.d. Both a and b are true.e. A, B, and C are right.
Which of the following statements is false? A. Banks have high levels of liquidity assets and stable funding since the financial crisis. B. Compared with bonds with short-term duration, bonds with long-term duration have uncertainty regarding future creditworthiness. C. Expected loss can decrease with an increase in a bond’s recovery rate. D. Macaulay duration is calculated as modified duration divided by one plus the bond’s yield to maturity.