Under Normal Conditions, Which of the Following Would Be Most

question 53

Multiple Choice

Under normal conditions, which of the following would be most likely to increase the coupon rate required to enable a bond to be issued at par?

• A) adding a call provision.
• B) the rating agencies change the bond's rating from baa to aaa.
• C) making the bond a first mortgage bond rather than a debenture.
• D) adding a sinking fund.
• E) adding additional restrictive covenants that limit management's actions.

---

Definitions:

Net Realizable Value

The estimated selling price of an item in the ordinary course of business minus any costs associated with the sale or disposal of the item.

Bad Debt Expense

An estimated expense that represents the amount of receivables that a company does not expect to collect due to customers' inability to pay.

Credit Balance

This occurs when the total credits in an account exceed the total debits, often indicating money owed to a customer or client.

Adjusting Entry

An amended bookkeeping entry made to rectify or allocate transactions to the appropriate accounting period or ensure that revenues and expenses are recorded in the period they occur.