Sound Fiscal Policy Dictates That the Maturity of Debt Should

question 26

True/False

Sound fiscal policy dictates that the maturity of debt should be no longer than the life of the assets it is used to finance.

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Definitions:

Accrued Interest

Interest that has accumulated over a period of time but has not yet been paid.

Premium

An amount paid for an insurance policy, or the price above the normal or nominal cost in financial transactions.

Discount

A reduction from the usual cost of something, often expressed as a percentage off the original price.

Convertible Bond

A financial instrument that allows the bondholder to convert the bond into a predetermined number of shares of common stock of the issuing company.