Chunky Chicken, Inc

question 32

Multiple Choice

Chunky Chicken, Inc., announced yesterday that it plans to issue $100 million in debenture bonds to fund the expansion of its fast food chain of restaurants. In financial terms, this means:

• A) the corporation will borrow $100 million worth of long-term financing. The bond issue will not carry any collateral.
• B) the corporation will issue $100 million worth of equity financing. The bond issue will be backed by the property and buildings purchased with the funds.
• C) the corporation will borrow $100 million worth of long-term financing. The issue will be backed by the property and buildings purchased with the funds.
• D) the corporation will issue $100 million worth of interest-free bonds. Financiers will be paid from the revenues created by the individual franchises.

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