Which One of the Following Statements Is True

question 13

Multiple Choice

Which one of the following statements is true?

• A) Convertible corporate bonds are more secure than government bonds.
• B) Convertible bonds often pay 3 to 4 percent more interest than nonconvertible bonds.
• C) Because of the conversion feature, it is not necessary to evaluate convertible, corporate bonds.
• D) 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:

Accounting Cycle

The collective process of identifying, analyzing, and recording the accounting events of a company.

Post-closing Trial Balance

A trial balance prepared after closing entries are made, used to check the balance of debits and credits have been maintained throughout the period after all closing entries are completed.

Financial Statements

Comprehensively prepared records presenting the financial activities and position of a business, person, or entity.

Work Sheet

A document used by accountants to prepare adjusting entries and to draft a company's financial statements, summarizing all of the ledger account balances.