Which of the Following Statements Is Correct

question 43

Multiple Choice

Which of the following statements is correct?

• A) For the corporation, interest paid on corporate bonds is not tax-deductible.
• B) Bond financing is seldom used to pay for a corporation's ongoing business activities.
• C) Bonds are a form of debt financing.
• D) Bonds do not have to be repaid at maturity.
• E) Interest payments to bondholders are at the discretion of the corporation.

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Definitions:

Debt Securities

Financial instruments representing money borrowed that must be repaid, such as bonds or notes.

Bonds

Financial instruments representing a loan made by an investor to a borrower, typically corporations or governmental entities, which pays back with interest.

Corporation

A legal entity recognized by law as separate from its owners, with its own rights, responsibilities, and liabilities.

Legal Entities

Organizations or structures that have legal rights and obligations, including the capacity to enter into contracts and sue or be sued.