In-Substance Defeasance Is Sometimes Used as a Method of Bond

question 57

Multiple Choice

In-substance defeasance is sometimes used as a method of bond retirement.Choose the correct statement about this practice.

• A)The firm may invest in any investment-grade debt security to retire the bonds as long as the investment securities are transferred irrevocably to a trustee
• B)The process may require the company which issued the bonds to make substantial payments in addition to the investments purchased for the defeasance
• C)The bonds are legally retired as a result
• D)Neither the assets used to effect the defeasance, nor the bonds themselves, are reported in the balance sheet, even though the bonds remain outstanding

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Definitions:

Drawing Number

A unique identifier assigned to a specific drawing or document within a set of engineering or architectural plans to facilitate easy reference.

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A style of handwriting where the letters are connected in a flowing manner, often used for faster writing and a unique personal touch.

Title Block

A section of a technical drawing or document that contains vital information such as project name, date, scale, and authorship.

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Represents the complete, actual size or extent of an object, without any reduction or enlargement.