Russell's Has a Bond Issue Outstanding

question 120

Multiple Choice

Russell's has a bond issue outstanding.The issue's indenture provision prohibits the firm from redeeming the bonds during the first five years following issuance.This provision is referred to as the _____ provision.

• A)safeguard
• B)market
• C)liquidity
• D)deferred call
• E)sinking fund

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Definitions:

Carrying Value

The book value of assets and liabilities on a company's balance sheet, calculated as the original cost minus any depreciation, amortization, or impairment costs.

Equity Accounts

Equity accounts represent the owner's value in a business, reflected through transactions like contributed capital and retained earnings.

Sinking Fund Bonds

Bonds that include a provision requiring the issuer to set aside funds regularly to repay the bond at maturity.

Principal

The primary amount of a loan or investment, excluding interest or profits.