Which of the Following Statements Is Correct

question 12

Multiple Choice

Which of the following statements is correct?

• A)The expected future profitability of a corporation influences the demand for that corporation's stock.
• B)When a corporation sells stock as a means of raising funds it is engaging in debt finance.
• C)The owners of bonds sold by the Microsoft Corporation are part owners of that corporation.
• D)All bonds are,by definition,perpetuities.

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Definitions:

Commercial Paper

Unsecured, short-term promissory notes of large firms, usually issued in denominations of $100,000 or more and having an interest rate of somewhat below the prime rate.

Credit Quality

An assessment of the creditworthiness of a borrower, reflecting their ability to repay debt.

Risky

Involving or exposed to a high degree of uncertainty or subject to potential loss.

Prime Rate

The lowest interest rate that banks generally charge their best customers.