If a Firm Is Allowed to Miss a Payment on a Bond

question 255

Multiple Choice

If a firm is allowed to miss a payment on a bond in a year in which it reports an operating loss, the bond is likely a(n) ______________ bond.

• A) Putable.
• B) Zero-coupon.
• C) Income.
• D) Floating rate.
• E) Callable.

---

Definitions:

Time-Series Analysis

A statistical method used to examine and interpret a sequence of data points, collected over a period of time, to identify trends or patterns.

Return On Equity

A measure of a corporation's profitability that reveals how much profit a company generates with the money shareholders have invested.

Du Pont Model

The Du Pont Model is a framework for analyzing a company's return on equity (ROE) by breaking it down into three components: profit margin, asset turnover, and financial leverage.

Net Profit Margin

A profitability metric indicating the percentage of revenue left as net income after all expenses, taxes, and costs have been subtracted.