Clip Joint Company Is Ready to Sell Its Bonds

question 183

Multiple Choice

Clip Joint Company is ready to sell its bonds.Which one of the following financial questions is most relevant to the issue of the bonds and that investors will most likely want answered before they purchase the bonds?

• A)How many product lines did Clip Joint Company have last year?
• B)What will be Clip Joint Company's cost to start operations in another city?
• C)How much debt does Clip Joint Company already have?
• D)Will Clip Joint Company pay dividends?

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Definitions:

401k

An employer-backed retirement investment program that permits workers to allocate a part of their earnings for savings before any tax deductions.

403b Plan

A 403b plan is a tax-advantaged retirement savings plan available to employees of public education organizations, some non-profit employers, and certain ministers, similar to a 401(k) plan.

Municipal Bond

A debt security issued by a city, municipality, or county to finance its capital expenditures, typically offering tax-exempt interest payments.

Corporate Bond

A debt security issued by corporations to finance their operations, which promises to pay the holder a specified rate of interest and return the principal at maturity.