The Refunding Provision of an Indenture Allows Bonds to Be

question 38

Multiple Choice

The refunding provision of an indenture allows bonds to be retired unless

• A) They are replaced with a lower coupon bond issue.
• B) The remaining time to maturity is less than five years.
• C) The remaining time to maturity is greater than five years.
• D) The stated time period in the indenture has not passed.
• E) The stated time period in the indenture has passed.

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Definitions:

Investments Account

An account on the balance sheet that reports the cost of investments held by an entity, such as stocks, bonds, or real estate.

Balance Sheet

A financial statement that shows the assets, liabilities, and shareholders' equity of a company at a specific point in time, providing a snapshot of a company's financial condition.

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its stock price.

Common Stock

Certificates issued by a corporation to investors as proof of their ownership rights; an account representing the ownership rights of investors in a corporation; a class of stock issued by a corporation that bears no preference rights.