Under Normal Conditions,which of the Following Would Be Most Likely

question 88

Multiple Choice

Under normal conditions,which of the following would be most likely to increase the coupon rate required for a bond to be issued at par?

• A) Adding additional restrictive covenants that limit management's actions.
• B) Adding a call provision.
• C) The rating agencies change the bond's rating from Baa to Aaa.
• D) Making the bond a first mortgage bond rather than a debenture.
• E) Adding a sinking fund.

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Definitions:

Profit

The financial gain obtained when the amount earned from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Marginal Product

Marginal product is the additional output resulting from the use of one more unit of a variable input, holding other inputs constant.

Fertilizer

Substances used to supply essential nutrients to plants, aiming to enhance growth, yields, and quality of agricultural produce.

Bushels

A unit of volume that is used in dry measure, equal to 32 quarts or approximately 35.2 liters.