In Which of the Following Situations Is There a Third

question 55

Multiple Choice

In which of the following situations is there a third party incidental beneficiary who would be unable to enforce the agreement?

• A) Wholesalers, when the buyer of a business promises the seller that he will pay outstanding debts to wholesalers who have supplied inventory for the business.
• B) A doctor, when an automobile accident policy states that the insurance company will reimburse the insured for medical expenses incurred as a result of an automobile accident.
• C) Workers, where a contractor agrees to post a performance bond to assure payment of workers and material suppliers.
• D) A debtor, where a new partner enters an accounting firm and agrees to pay a share of debts incurred prior to his admission to the firm.

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Definitions:

Semiannual Coupon

A semiannual coupon refers to the interest payment made to bondholders twice a year.

Par Value

The face value of a bond or stock as stated by the issuing company, which does not necessarily reflect its market value.

Coupon Interest Rate

Yearly rate of interest on a bond, denoted as a percentage of its principal value.

Yield To Maturity

The total return anticipated on a bond if the bond is held until it matures, encompassing all interest payments and the repayment of principal.