When a Corporation Issues a Bond

question 34

Multiple Choice

When a corporation issues a bond

• A)the purchaser of the bond assumes ownership rights in the corporation.
• B)it is making a promise to pay interest each year and to repay the principal at a stated time in the future.
• C)it is called equity capital.
• D)it is called financing through the stock market.
• E)it is making a promise to pay interest each year but not repay the principal.

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Definitions:

Uncertainty

The state of having limited knowledge where it is impossible to exactly describe existing states or future outcomes.

Intuition

The ability to understand or know something immediately based on one's feelings rather than factual evidence or logical reasoning.

Availability Heuristic

Bases a decision on recent events relating to the situation at hand.

Past Occurrences

Events or incidents that have taken place before the current moment; historical events or happenings.