Ulysses Has a Number of Creditors and Has Recently Realized

question 66

Multiple Choice

Ulysses has a number of creditors and has recently realized that within a year he will have to declare bankruptcy.Ulysses transfers his house to his wife and uses most of his remaining assets to pay owed taxes to the government in order to avoid possible prosecution.He declares bankruptcy four months later.Which of the following is true?

• A)Both actions are void.
• B)The preference to the government is void,but not the settlement of the house.
• C)The settlement of the house is void,but not the governmental preference.
• D)Neither action is void.
• E)Neither is void,but only if Ulysses has declared them to be arms-length.

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Definitions:

Quoted Coupon Rate

This is the annual interest rate paid by a bond, expressed as a percentage of the bond’s face value and fixed for the bond's lifespan.

Zero Coupon Bond

A bond that is issued at a discount to its face value and pays no interest but is redeemed at its face value at maturity.

Required Return

Required return is the minimum expected yield by investors to compensate for the risk of an investment.

Semiannual Compounding

Interest calculation method where interest is added to the principal sum of a loan or deposit twice a year.