Which of the Following Statements Is FALSE

question 56

Multiple Choice

Which of the following statements is FALSE?

• A) If a bond issuer fails to live up to any covenant, the issuer goes into bankruptcy immediately.
• B) The stronger the covenants in the bond contract, the less likely an issuer will default on the bond and so the lower the interest rate investors will require to buy the bond.
• C) Covenants are restrictive clauses in a bond contract that limit the issuer from taking actions that may undercut its ability to repay the bonds.
• D) Bond agreements often contain covenants that restrict the ability of management to pay dividends.

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Definitions:

Net Impression

The overall impression created by all elements of an advertisement or communication, considered as a whole.

FTC Act

Refers to the Federal Trade Commission Act which established the Federal Trade Commission (FTC) and empowers it to prevent unfair competition and prohibit deceptive practices in commerce.

Misleading Claim

False or deceptive statements made about a product or service that can confuse the consumers or lead them to have incorrect impressions.

Lanham Act

A piece of legislation that acts as the primary federal trademark statute in the United States, providing protection to trademark owners in their brand names and logos.