If a Corporate Security Can Be Exchanged for a Fixed

question 19

Multiple Choice

If a corporate security can be exchanged for a fixed number of shares of stock, the security is said to be:

• A) callable.
• B) convertible.
• C) protected.
• D) putable.

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Definitions:

Notes Receivable

Written promises for amounts to be received within a certain period, recognized as assets on the balance sheet.

Contingent Liability

A potential obligation that depends on a future event arising from past transactions or events.

Allowance For Doubtful Accounts

A contra-asset account that represents the estimated amount of receivables which are not expected to be collected.

Accounts Receivable Turnover

A financial metric that measures how efficiently a company collects revenue from its credit sales by dividing net credit sales by the average accounts receivable.