Bond ____ Occurs When a Firm Exercises Its Option to Redeem

question 14

Multiple Choice

Bond ____ occurs when a firm exercises its option to redeem a callable bond issue and replaces it with a lower (interest) cost issue.

• A) redemption
• B) retirement
• C) recall
• D) refunding

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Definitions:

Assets

Resources owned or controlled by a business or individual that have expected future economic benefit.

Equity

The value of an owner's interest in a company, calculated as the difference between the assets and liabilities on a company's balance sheet.

Cash Inflows

The total amount of money being received by a company, from operations, investments, and financing activities.

Operating Activities

Transactions and events that affect the net income of a business.