When a Corporation Issues a Bond

question 104

Multiple Choice

When a corporation issues a bond

• A) it is called equity capital.
• B) it is making a promise to pay interest each year but not repay the principal.
• C) it is making a promise to pay interest each year and to repay the principal at a stated time in the future.
• D) it is called financing through the stock market.
• E) the purchaser of the bond assumes ownership rights in the corporation.

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Definitions:

Stock Price

The cost of purchasing a single share of a particular company's stock on the open market, fluctuating based on demand, market conditions, and company performance.

Shares Outstanding

Shares outstanding refer to the total number of shares of a company's stock currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

Cash Dividend

A monetary payment made by a company to its shareholders out of its current or retained earnings.

Excess Cash

Funds that exceed the necessary operating, investing, and financing requirements of a company, potentially available for dividends or investments.