Bonds That Pay Interest in Relation to a Company's Earnings

question 116

Multiple Choice

Bonds that pay interest in relation to a company's earnings are ____________ bonds.

• A) Income.
• B) Exotic.
• C) Floating rate.
• D) Variable bonds.
• E) Foreign bonds.

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Definitions:

Unlevered Cost

The cost of an investment that does not include the effects of borrowing or leverage.

Annual Coupon

The annual interest payment made to bondholders, calculated as a percentage of the bond's face value.

Unlevered Cost

refers to the cost of an investment or project that does not include the effect of financial leverage, showing its risk and return profile without debt.