A ____ Has First Claim on Specified Assets, While a ____

question 45

Multiple Choice

A ____ has first claim on specified assets, while a ____ is a debenture that has claims against a firm's assets that are junior to the claims of mortgage bonds and regular debentures.

• A) first mortgage bond; second mortgage bond
• B) first mortgage bond; debenture
• C) first mortgage bond; subordinated debenture
• D) chattel mortgage bond; subordinated debenture
• E) none of the above

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Definitions:

Discount Rate

A rate used to convert future cash flows into their present value, fundamental in the assessment of investment attractiveness.

IRR

Internal Rate of Return (IRR) is a financial measure used to evaluate the profitability of potential investments by calculating the interest rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equals zero.

Initial Cost

The initial outlay or expenditure associated with the purchase or acquisition of an asset, not including ongoing operating or maintenance costs.

Revenue

The total amount of income generated by the sale of goods or services related to a company's primary operations.