Which One of the Following Statements Related to a Put

question 29

Multiple Choice

Which one of the following statements related to a put bond is correct?

• A)Put bonds are generally redeemed at a premium over par value.
• B)Put bonds can be redeemed at any time once the put protection period has elapsed.
• C)The put feature effectively sets the ceiling price for the bond.
• D)The put feature helps protect bondholders from the risks associated with rising interest rates.
• E)A putable bond is generally priced lower than a comparable nonputable bond.

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Definitions:

Unamortized Premium

Unamortized Premium is the portion of the bond premium that has not yet been expensed and is allocated over the remaining life of the bond as an adjustment to interest expense.

Consolidated Gain or Loss

The combined profit or loss of a parent company and its subsidiaries, reported in the consolidated financial statements.

Statement of Cash Flows

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.

Noncontrolling Interest

A portion of equity in a subsidiary not held by the parent company, representing minority shareholders' interest in the subsidiary's net assets.