FOUND.OF FINANCIAL MANAGEMENT-ACCESS
FOUND.OF FINANCIAL MANAGEMENT-ACCESS
17th Edition
ISBN: 9781260519969
Author: BLOCK
Publisher: MCG
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Chapter 16, Problem 8DQ

Under what circumstances would a call on a bond be exercised by a corporation? What is the purpose of a deferred call? (LO16-3)

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44) Which is the definition of a protective covenant? a) Bonds are repaid at maturity, where investors receive face value b) Sinking fund c) An agreement giving the corporation the option to repurchase a bond at a specified price prior to maturity d) Part of a bond indenture which limits certain actions of a company that it may wish to undertake e) The preference a bond issue has over other lenders
(35) If a company has any debt covenants, those debt covenants need to be considered whenever that company makes any decisions. True or False.
27. If a long-term bonds becomes callable due to the violation of a debt covenant Group of answer choices a. The debt may continue to be classified as long term if the entity believes the covenant can be renegotiated. b. The debt must be reclassified as current. c. Cash must be reserved to pay the debt. d. Retained earnings must be restricted in the amount of the debt.

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