At the Beginning of the Year,long-Term Debt of a Firm

question 63

Multiple Choice

At the beginning of the year,long-term debt of a firm is $310 and total debt is $350. At the end of the year,long-term debt is $280 and total debt is $370. The interest paid is $50. What is the amount of the cash flow to creditors?

• A) -$30
• B) $0
• C) $20
• D) $30
• E) $80

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Definitions:

Yield to Call

The yield of a bond or note if you were to buy and hold the security until the call date.

Call Premium

The amount above the par value a bondholder receives if the issuer redeems a bond before its maturity date.

Semiannually

A term describing an action or event that occurs twice a year.

Semiannual Coupon

A bond or fixed-income security payment made to its holder twice a year as interest for the investment.