Which of the Following Statements Regarding Bonds Payable Is True

question 108

Multiple Choice

Which of the following statements regarding bonds payable is true?

• A)Generally,bonds are issued in denominations of $100.
• B)When an issuing company's bonds are traded in the "secondary" market,the company will receive part of the proceeds when the bonds are sold from the first purchaser to the second purchaser.
• C)A debenture bond is backed by specific assets of the issuing company.
• D)Most bonds are term bonds,meaning that the entire principal amount will mature on a single date.

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Definitions:

Coupon Rate

The interest rate that a bond issuer will pay to a bondholder.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, typically paying fixed dividends.

Cost of Retained Earnings

The opportunity cost for a company of using its retained earnings as a source of finance for new investments, often estimated using the cost of equity.

Growth Rate

The rate at which a company's sales, earnings, dividends, or assets increase over a specified period.