Mega Computer Needs a Large Amount of Long-Term Financing for a Long

question 171

Multiple Choice

Mega Computer needs a large amount of long-term financing for a long period of time. The best choice is most likely

• A) loans.
• B) preferred stock.
• C) common stock.
• D) commercial paper.
• E) bonds.

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Definitions:

Zero-Coupon Bond

A Zero-Coupon Bond is a debt security that doesn't pay interest (a coupon) but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value.

Yield To Maturity

The total return anticipated on a bond if it is held until the end of its lifetime.

Face Value

The nominal value printed on a financial instrument such as a bond or stock certificate; it is the amount paid at maturity or when the instrument is issued.

Current Price

The latest market price at which an asset or service is traded.