If the Market Rate of Interest Is 6% and a Corporation's

question 43

True/False

If the market rate of interest is 6% and a corporation's bonds bear interest at 7%, the bonds will sell at a discount.

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Definitions:

Compensating Balance

A minimum bank account balance that a borrower agrees to maintain as a condition for borrowing from a lender.

Minimum Cash Balance

The least amount of cash a company aims to hold in its accounts to meet immediate transaction demands.

Bank Requirement

Specific conditions imposed by a bank on a borrower or account holder, including minimum balances and fees.

Risk Assessment

The identification, evaluation, and prioritization of risks followed by coordinated efforts to minimize, monitor, and control the probability or impact of unfortunate events.