Answered: 1. A debenture is: Group of answer…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1. A debenture is:

Group of answer choices

a secured bond

a callable bond

an unsecured bond

a redeemable bond

2. A convertible bond

Group of answer choices

comes with a retractable top

can be called in for early retirement

can be turned in by the investor for early retirement

can be swapped for other securities of the issue, typically stock

3. The coupon interest rate:

Group of answer choices

is the same as the effective interest rate

is the same as the market interest rate

is smaller than the stated interest rate.

is the same as the stated interest rate

4. A bond has a face value of $10,000,000. It has a stated interest rate of 5% and a market interest rate of 6%. It sold for $900,000. It pays interest once a year on December 31. How much interest will the company pay each year?

Group of answer choices

$500,000

$450,000

$600,000

$540,000

5. A bond has a stated interest rate of 13% and a market interest rate of 12% It has a face value of $1,000. Interest is payable each February 1 and August 1. How much interest would the company pay on February 1?

Group of answer choices

$130

$120

$65

$60

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