Which of the Following Statements Is True

question 103

Multiple Choice

Which of the following statements is true?

• A)Convertible corporate bonds are more secure than government bonds.
• B)Convertible bonds often pay 1 to 2 percent more interest than nonconvertible bonds.
• C)Because of the conversion feature, it is not necessary to evaluate convertible, corporate bonds.
• D)In reality, there is no guarantee that bondholders will convert to common stock even if the market value of the common stock does increase in value.
• E)Even if convertible bondholders convert their investment to common stock, the bondholders still receive interest payments.

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Definitions:

Raw Materials Cost

The cost associated with the acquisition of raw materials that are then transformed into finished goods.

Expected Cash Collections

An estimate of the amount of money a company anticipates receiving from its customers over a certain period, based on sales forecasts and credit policies.

Ending Finished Goods Inventory

The value of goods that have been completed but not yet sold at the end of an accounting period.

Ending Raw Materials Inventory

The value of raw materials that remain unsold and available for use at the end of an accounting period.