If a Company Sells Its Bonds at More Than Face

question 181

Multiple Choice

If a company sells its bonds at more than face value, the effective interest rate is

• A) less than the contract interest rate.
• B) more than the contract interest rate.
• C) less than the yield rate.
• D) more than the yield rate.

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Definitions:

Stock Ownership

Holding shares in a company, which represent a portion of the company's capital and give certain rights to the shareholder.

Voting Rights

The ability of shareholders to vote on corporate matters, such as the election of the board of directors.

Management Control

Refers to the processes, policies, and procedures that are put in place by an organization's management to ensure that its goals and objectives are achieved efficiently and effectively.

Unethical Behaviour

Actions or practices that breach moral or professional conduct codes.