Which of the Following Statements Is CORRECT

question 90

Multiple Choice

Which of the following statements is CORRECT?

• A) Senior debt is debt that has been more recently issued,and in bankruptcy it is paid off after junior debt because the junior debt was issued first.
• B) A company's subordinated debt has less default risk than its senior debt.
• C) Convertible bonds generally have lower coupon rates than non-convertible bonds of similar default risk because they offer the possibility of capital gains.
• D) Junk bonds typically provide a lower yield to maturity than investment-grade bonds.
• E) A debenture is a secured bond that is backed by some or all of the firm's fixed assets.

---

Definitions:

Average Inventory

A measure used to estimate the value of inventory over a certain period by averaging the beginning and ending inventory.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, crucial for calculating cost of goods sold.

Cost of Goods Sold

Direct costs attributable to the production of the goods sold by a company, including materials and labor.

Net Income

The total earnings or profit of a company after subtracting all expenses, taxes, and costs from its total revenue.