If a Borrower Defaults on a Bond,it Means That

question 100

Multiple Choice

If a borrower defaults on a bond,it means that:

• A) the borrower has one year to pay before facing possible jail time.
• B) the borrower did not pay back the loan on the maturity date.
• C) the borrower only has to pay a portion of the loan back.
• D) the borrower has paid back the loan on the maturity date.
• E) the borrower has paid back the loan prior to the maturity date.

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Definitions:

Temporary Differences

Differences between the carrying amount of assets or liabilities and their tax bases, which will result in taxable or deductible amounts in the future.

Permanent Differences

Permanent differences are disparities between taxable income and accounting income that arise from certain transactions and events, which will not reverse in the future.

Deferred Tax Assets

Future tax benefits arising from situations where the amount of taxes paid on financial statements exceeds the amount owed for tax purposes, which can be used to reduce future tax liability.

Deferred Tax Liabilities

Deferred tax liabilities are taxes that have been accrued but will not be paid for until a future date, typically due to timing differences between accounting and tax laws.