Which of the Following Statements Concerning Debentures Is Incorrect

question 57

Multiple Choice

Which of the following statements concerning debentures is incorrect?

• A) A trustee, such as a bank or an insurance company, must be appointed to protect the rights of the debenture holders.
• B) An issue of debentures to the public must be accompanied by a prospectus.
• C) The market value of debentures is always the same as their face value.
• D) The division of debenture borrowings into $100 or $50 units allows many small investors to participate in the issue.

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Definitions:

Compounded Annually

An investment or loan interest calculation method where interest is added to the principal sum at the end of each year, with future interest then earned on the new total.

Present Value

Today's value of future cash flows or a lump sum, calculated using an established return rate.

Discounted

The process of determining the present value of a payment or a series of payments made in the future, using a specific discount rate.

9%

Typically refers to a specific interest rate or percentage in financial contexts, such as a loan interest rate or investment return rate.