In the Case of Necessaries, the Intoxicated Individual Is Not

question 96

True/False

In the case of necessaries, the intoxicated individual is not allowed to disaffirm, but is held liable for the reasonable value of such items.

Recognize the impact of bond features (such as call provisions, sinking funds, and convertibility) on required coupon rates.

Identify the considerations for rating agencies in assessing bond default risk.

Understand the conditions under which companies are likely to call their bonds.

Analyze the effects of market interest rates on bond prices and yields.

---

Definitions:

Credit Risk Analysis

The process of evaluating the risk of potential default by a borrower or counterparty.

Forecast Horizon

The maximum period for which a prediction or forecast is considered valid or reliable, beyond which the uncertainty becomes too large.

Depreciation Expense

The portion of the total cost of a tangible asset that is charged as an expense in a particular accounting period due to its usage and wear and tear.

Financial Structure

The mix of a company's liabilities and shareholders' equity used to finance its assets, including short-term and long-term debt, as well as equity capital.