If Zeus Energy Bonds Are Upgraded from BBB− to BBB

question 111

Multiple Choice

If Zeus Energy bonds are upgraded from BBB− to BBB+, which of the following statements is true?

• A) The current bond price will decrease and interest rates on new bonds issued will increase.
• B) Interest rates required on new bonds issued will increase.
• C) The current bond price will decrease.
• D) The current bond price will increase and interest rates on new bonds issued will decrease.

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Definitions:

Proxy Fight

A battle for control of a company where opposing sides attempt to win the votes of shareholders to achieve a particular outcome during the company's annual meeting.

Takeover Candidate

A company that appears attractive for acquisition by another firm due to its assets, financial performance, or market position.

Capital Structure

The way a corporation finances its assets through a combination of debt, equity, and hybrid securities.

Debt and Equity

Components of a company's capital structure, with debt representing borrowed money to be paid back and equity representing ownership interest.