Which One of the Following Methods Ensures That Firms Repay

question 26

Multiple Choice

Which one of the following methods ensures that firms repay the principal on bonds entirely at maturity?

• A) By setting up a sinking fund that receives regular sums from the firm that will be sufficient to redeem the bonds
• B) By ensuring that all bonds have the same redemption date
• C) By creating a limited liability company
• D) By insisting that investors agree to invest in future bonds

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Definitions:

Structurally

Relating to or pertaining to the arrangement of and relations between parts or elements of a complex entity.

Ammonia

A compound of nitrogen and hydrogen (NH3) with a distinct pungent smell, used widely as a fertilizer and cleaning agent.

Lewis Structure

Representation of the distribution of electrons in molecules, showing how atoms are connected and where lone pairs of electrons are located.

Hydrogen Sulfide

A colorless, poisonous, flammable gas with the characteristic foul odor of rotten eggs; used in the manufacture of chemicals, in metallurgy, and as a fungicide and insecticide.