WordTechGuru Corporation Issues Bonds with a Bond Covenant That Specifies

question 9

Multiple Choice

WordTechGuru Corporation issues bonds with a bond covenant that specifies a stated debt-to-equity ratio range that management must maintain and further requires management to provide financial information to bondholders, including the buying and selling of major assets. Which of these statements is most likely true of the bonds they are issuing?

• A)The bonds will likely be very long term.
• B)The bonds will likely have a call provision.
• C)The bonds will be considered more risky and thus have a higher interest rate.
• D)The bonds will be considered less risky and thus have a lower interest rate.

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Definitions:

Independence

In the context of probability and statistics, refers to events that have no influence on each other's likelihood of occurring.

Random Sample

A sample drawn from a population in such a way that every individual has an equal chance of being selected.

Blood Type

The classification of human blood based on the presence or absence of antibodies and inherited antigenic substances on the surface of red blood cells.

Association

In statistics, it refers to any relationship or correlation between two or more variables.