Which of the Following Statements Is Correct

question 12

Multiple Choice

Which of the following statements is correct?

• A) Once a firm declares bankruptcy,it is liquidated by the trustee,who uses the proceeds to pay bondholders,unpaid wages,taxes,and lawyer fees.
• B) A firm with a sinking fund payment coming due would generally choose to buy back bonds in the open market,if the price of the bond exceeds the sinking fund call price.
• C) Income bonds pay interest only when the amount of the interest is actually earned by the company.Thus,these securities cannot bankrupt a company and this makes them riskier to investors than regular bonds.
• D) One disadvantage of zero-coupon bonds is that issuing firms cannot realize the tax savings from issuing debt until the bonds mature.
• E) Other things held constant,callable bonds should have a lower yield to maturity than noncallable bonds.

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Definitions:

University Of Michigan

A prestigious public research university in Ann Arbor, Michigan, known for its rigorous academic programs and significant contributions to research.

Admission Points

Criteria or scores used by educational institutions to determine an applicant's eligibility for entrance.

Minority Status

The position of being part of a group that is smaller in number within a society and often has less power, representation, or privilege.

Cultural Capital

The non-financial social assets that promote social mobility beyond economic means, including education, intellect, style of speech, dress, or physical appearance.