When a Company Invests in a Bond Which Has a Maturity

question 98

Multiple Choice

When a company invests in a bond which has a maturity greater than one year and pays cash:

• A)equity remains unchanged.
• B)current asset increases.
• C)liabilities increase.
• D)total assets increases.

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Definitions:

Specified Price

Specified Price is the predefined price at which an investor agrees to buy or sell a security or commodity in a futures contract.

Municipal Bond Yields

The return investors can expect to earn if they hold a municipal bond until maturity, often tax-exempt.

Corporate Bond Yields

The interest income received from holding corporate bonds, expressed as a percentage of the bond's price.

Eurodollars

US dollars deposited in banks outside the United States, often used for international transactions and investing.