The Yield to Call Is a More Conservative Yield Measure

question 90

Multiple Choice

The yield to call is a more conservative yield measure whenever the price of a callable bond is quoted at a value

• A) Equal to or greater than par plus one year's interest.
• B) Equal to par.
• C) Equal to par less one year's interest.
• D) Less than par.
• E) Five percent over par.

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Definitions:

Short-term Note Payable

A short-term note payable refers to a debt obligation that is due for repayment within a year or less.

Contingent Liability

A potential obligation that may arise depending on the outcome of a future event, not recognized on the balance sheet unless occurrence is probable and the amount can be reasonably estimated.

Estimated Liability

A potential financial obligation that may arise in the future, recognized in accounting based on probable expenditures.

Times Interest Earned

A financial ratio that measures a company's ability to meet its debt obligations by comparing its income before interest and taxes (EBIT) to its interest expenses.