An 8% Debenture Has Five Years of Call Protection and Is

question 50

Multiple Choice

An 8% debenture has five years of call protection and is thereafter callable at 100%,except that it is nonrefundable below interest cost.Which of the following statements is correct?

• A)The debenture may be called any time during the next five years.
• B)The debenture may not be called during the next five years.
• C)The lender has the option to demand early repayment.
• D)The bond should be called when the yield on similar noncallable bonds falls to 8%.

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Definitions:

Debit

An entry recording an amount owed, typically representing the increase in assets or decrease in liabilities of an account in accounting.

Credit

A payment subtracted from existing balance.

Day Sheet

A document used in accounting and bookkeeping that records all transactions for a particular day.

Accounts Receivable

Funds that are due to a business from its clients for products or services already provided but not yet compensated for.