Atlas Corporation Is in Sound Financial Condition

question 8

Multiple Choice

Atlas Corporation is in sound financial condition. It sells a long-term bond. Which of the following make the interest rate on this bond lower than otherwise?

• A)Both Altas' sound finances and the long term of the bond.
• B)Atlas' sound finances but not the long term of the bond.
• C)The long term of the bond but not Atlas' sound finances.
• D)Neither Atlas' sound finances nor the long term of the bond.

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Definitions:

Floating Rate Bond

A bond with an interest rate that is tied to a benchmark, such as LIBOR, and can change over time.

Coupon Payment

A periodic interest payment made to bondholders during the life of a bond.

Income Bond

A type of bond that only pays interest if the issuer has sufficient earnings to cover the interest payments.

Protective Covenants

Conditions written into financial agreements that the issuer must follow, such as restrictions on issuing more debt or making capital distributions.