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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Definitions:

Imports

Goods and services bought by a country from another country, contributing to international trade.

Exports

Goods or services provided by one country to another in exchange for foreign currency, contributing to a country's economic health.

Absolute Advantage

The ability of an individual, company, or country to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service.

Exchange Rate

The price of one currency in terms of another currency for conversion purposes.