Which of the Following Statements Is False with Respect to Bonds

question 148

Multiple Choice

Which of the following statements is false with respect to bonds?

• A)Firms issue bonds in very large single issues.
• B)Bonds must be held until maturity by the initial investor.
• C)The denomination of the bond is usually referred to as the face value.
• D)Bonds that are not backed by specific collateral of the issuing company are known as debenture bonds.

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Definitions:

Payback

The period of time required to recoup the funds expended in an investment, or how long it takes for an investment to reach a breakeven point.

Annual Cash Flows

The total cash that is generated and used by a business in one fiscal year.

Required Rate

This is often referred to as the minimum acceptable return on an investment, set by investors or managers.

Payback

The amount of time it takes for an investment to generate an amount of income or cash flow to recover its initial cost.