Finance Flashcards

Ch 15 MC

sold in large denominations Each of the following is correct regarding bonds except they are
interest must be paid on a periodic basis regardless of earnings From the standpoint of the issuing company a disadvantage of using bonds as a means of long term financing is that
$210,000 If a corporation issued $3,000,000 in bonds which pay 10% annual interest what is the annual net cash cost of this borrowing if the income tax rate is 30%
have specific assets of the issuer pledged as collateral Secure bonds are bonds that
a bond indenture A legal document which summarizes the rights and privileges of bondholders as well as the obligations and commitments of the issuing company is called
their earnings per share may decrease Stockholders of a company may be reluctant to finance expansion through issuing more equity because
earnings per share on common stock may be lower Which of the following is not an advantage of issuing bonds instead of common stock
mortgage bonds Bonds that are secured by real estate are termed
term bonds Bonds that mature at a single specified future date are called
convertible bonds Bonds that may be exchanged for common stock at the option of the bondholders are called
callable bonds Bonds that are subject to retirement at a stated dollar amount prior to maturity at the option of the issuer are called

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