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:

Investing Activity

Financial actions related to the purchase and sale of long-term assets and other investments, not including inventory, categorized in the cash flow statement.

Long-Term Investment

An asset or investment held for an extended period, typically exceeding one year, to achieve higher returns.

Indirect Method

A cash flow statement preparation approach that adjusts net income for changes in non-cash accounts to calculate operating cash flow.

Operating Activities

Actions and transactions related to the core business operations, such as sales and the production of goods or services.