How Is a Perpetuity Distinguished from Other Bonds

question 99

Multiple Choice

How is a perpetuity distinguished from other bonds?

• A)It pays continuously compounded interest.
• B)It pays interest only when it matures.
• C)It never matures.
• D)It will be used to purchase another bond when it matures unless the owner specifies otherwise.

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Definitions:

Legal Capital

The portion of a company's equity that cannot legally be distributed to the shareholders as dividends, typically the par value of issued shares.

Corporate Creditors

Individuals or institutions owed money by a corporation, typically as a result of lending money or providing goods and services on credit.

IFRS

International Financial Reporting Standards are accounting guidelines created by the International Accounting Standards Board, increasingly adopted worldwide for drafting financial statements of public companies.

Reserves

Funds set aside by a company to cover future obligations, losses, or unforeseen expenses.