Notes and Bonds Are Long-Term Debt Instruments

question 248

Multiple Choice

Notes and bonds are long-term debt instruments. Long-term debt instruments are sold at ______________ when the market rate _____________ the stated interest rate.

• A) Discount, exceeds
• B) Premium, exceeds
• C) Discount, less than
• D) Premium, less than

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Definitions:

Total Assets

The sum of all current and non-current assets owned by an entity as reported on the balance sheet.

EBIT

Earnings Before Interest and Taxes; a measure of a firm's profit that includes all expenses except interest and income tax expenses.

Debt/Assets Ratio

A financial ratio that indicates the proportion of a company's assets that are financed by debt.

Common Equity

The amount of ownership interest that is common stockholders have in a company, reflecting their equity stake.