Which of the Following Statements Is Most Correct

question 20

Multiple Choice

Which of the following statements is most correct?

• A) A firm with a sinking fund payment coming due would generally choose to buy back bonds in the open market, if the price of the bond exceeds the sinking fund call price.
• B) Income bonds pay interest only when the amount of the interest is actually earned by the company. Thus, these securities cannot bankrupt a company and this makes them safer to investors than regular bonds.
• C) One disadvantage of zero coupon bonds is that issuing firms cannot realize the tax savings from issuing debt until the bonds mature.
• D) Other things held constant, callable bonds should have a lower yield to maturity than noncallable bonds.
• E) All of the above statements are false.

---

Definitions:

Deindividuation

Deindividuation is a psychological state where an individual loses their self-awareness and sense of individuality, often leading to disinhibited behavior.

Submerged

This term relates to something being beneath the surface of water or another liquid; it can also metaphorically refer to something being hidden or not visible at the surface level.

Groupthink

A psychological phenomenon that occurs within a group of people, where the desire for harmony or conformity results in an irrational or dysfunctional decision-making outcome.

Self-Awareness

The conscious knowledge of one's own character, feelings, motives, and desires.