Of the Following Provisions That Might Be Found in a Bond

question 16

Multiple Choice

Of the following provisions that might be found in a bond indenture,which would tend to reduce the coupon interest rate on the bond in question?

• A) A subordination clause in a debenture.
• B) A call provision.
• C) A convertible feature.
• D) Having relatively few restrictive covenants.
• E) All of the above.

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Definitions:

Activity Level

A measure of the volume of production or operations, often used in cost accounting to allocate variable and fixed costs appropriately.

Mixed Cost

A cost that contains both variable and fixed cost elements, making its total expense vary with changes in the level of output.

Fixed Cost

Expenses that do not fluctuate with changes in production volume, staying constant even as production levels vary.

Liability Insurance

A type of insurance that protects an individual or business from the risk of being sued and held legally liable for something such as malpractice, injury, or negligence.