Listed Below Are Some Provisions That Are Often Contained in Bond

question 60

Multiple Choice

Listed below are some provisions that are often contained in bond indentures.Which of these provisions,viewed alone,would tend to reduce the yield to maturity that investors would otherwise require on a newly issued bond?
​1) Fixed assets are used as security for a bond.
2) A given bond is subordinated to other classes of debt.
3) The bond can be converted into the firm's common stock.
4) The bond has a sinking fund.
5) The bond has a call provision.
6) The indenture contains covenants that restrict the use of additional debt.

• A) 1,3,4,6
• B) 1,4,6
• C) 1,2,3,4,6
• D) 1,2,3,4,5,6
• E) 1,3,4,5,6

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Definitions:

High Trust

A situation or relationship characterized by a strong belief in the reliability, truth, ability, or strength of a party, often critical for successful negotiations.

High Distrust

Characterizes a situation or relationship where there is a significant lack of confidence or reliability in one or more parties.

GRIT Strategy

A method proposed for de-escalating conflict, involving the announcement of conciliatory intentions and the invitation for the other side to reciprocate.

Unilateral Actions

Actions or decisions made by one party or nation independently without consultation, agreement, or approval from others.