Consider the Following Five Statements

question 27

Multiple Choice

Consider the following five statements. i.A eurobond is a bond issued by a foreign borrower in a currency that is not the currency of the country in which the bond is issued.
ii.Eurobonds tend to be bought mainly by banks and institutional investors,rather than by individuals.
iii.Straight eurobonds are fixed-interest securities with periodic coupon payments.
iv.FRNs are coupon instruments; however,the coupon is reset periodically throughout the term of the note.
v.Convertible notes give the holder the option to convert the bond,on predetermined terms,into another form of instrument such as equity.
How many of these statements are true and how many are false?

• A) 1 statement is true and 4 are false.
• B) 3 statements are true and 2 are false.
• C) 2 statements are true and 3 are false.
• D) 4 statements are true and 1 is false.

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Definitions:

Negative NPVs

Situations where the Net Present Value of an investment is less than zero, indicating that the project’s projected earnings, discounted back to the present value, are less than the initial investment, suggesting it may not be profitable.

Positive NPVs

Situations where the Net Present Value of an investment or project is greater than zero, indicating profitability.

Small Firms

Companies with a relatively small market capitalization, often characterized by fewer employees and lower revenues compared to larger corporations.

Capital Projects

Large-scale investment projects that are undertaken by organizations to build, maintain, or improve on their capital assets.