The Following Are Some Provisions That Are Often Found in a Bond

question 18

Multiple Choice

The following are some provisions that are often found in a bond indenture.Which of these provisions would probably NOT reduce the yield to maturity that investors would otherwise require on a newly issued bond?

• A)Assets are used as security for the bond.
• B)The bond has a sinking fund.
• C)The bond is subordinate to other classes of debt.
• D)The indenture contains covenants that prevent the issuance of additional debt.

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Definitions:

Private Companies

Companies owned by individuals or groups that are not traded publicly and whose shares are not available on the stock market.

Public Companies

Companies whose shares are traded freely on a stock exchange, subject to regulatory reporting requirements and disclosure to the public.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB).

Accounting Policies

The distinct guidelines, foundations, methods, regulations, and procedures employed by an organization in the creation and disclosure of financial reports.