Reich, Inc

question 45

Multiple Choice

Reich, Inc. issued bonds with a maturity amount of $200,000 and a maturity ten years from date of issue. If the bonds were issued at a premium, this indicates that

• A) the effective yield or market rate of interest exceeded the stated (nominal) rate.
• B) the nominal rate of interest exceeded the market rate.
• C) the market and nominal rates coincided.
• D) no necessary relationship exists between the two rates.

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Definitions:

De Facto Corporation

Latin for “corporation in fact”; a corporation that has not substantially met the requirements of the state incorporation statutes.

Corporation By Estoppel

A defective corporation that has conducted business with a third party and therefore cannot deny its status as a corporation to escape liability.

De Jure Corporation

Latin for “lawful corporation”; a corporation that has met the mandatory statutory provisions and thus received its certificate of incorporation.

Alien Corporation

A business that is incorporated in a foreign country.