Which of the Following Statements Is Correct

question 90

Multiple Choice

Which of the following statements is correct?

• A)Stock is a form of debt capital.
• B)Bonds are a form of debt capital.
• C)Stock must be repaid at maturity.
• D)Bonds do not have to be repaid at maturity.
• E)Interest payments to bondholders are at the discretion of the corporation.

---

Definitions:

Retained Earnings

The portion of a company's profit that is held or retained and not paid out as dividends to shareholders.

Interest Rate Swap

A financial derivative contract in which two parties agree to exchange one stream of interest payments for another, based on a specified principal amount.

Fixed Rate

A fixed rate refers to an interest rate for a loan or mortgage that remains constant over the term of the loan.

Variable Rate

An interest rate which can change over the period of the loan, credit, or investment depending on market conditions.