answer 7 and 8 and 9 and 11 6 For a corporate bond the provi

answer 7 and 8 and 9 and 11

6. For a corporate bond the provision which allows a company to pay off its bonds eary if the company wishes) is the call feature b. put feature c. trustee d. conversion feature 7. Which of the following is not a type of equity financing? a. retained earnings b. debentures c. common stock d. preferred stock 8, A preferred stock pays a $4.00 annual dividend. If you require an 12% rate of return on similar risk investments, what is the value of a share of this preferred stock? a. $.48 b. $4.48 c. $33.33 d. $48.00 9. Which of the following types of bonds are issued by state or local governments? a. Treasury notes b. subordinated debentures c. Federal agency bonds d. municipal bonds 10. The greater the liquidity of a bond the lower the interest rate b. higher the interest rate 11. A corporate 9.5% coupon bond has a yield to maturity of 10.0% A bondholder will receive how much in interest each year? a. $9.50 b. $10.00 c. $95.00 d. $100.00

Solution

7)

Debt is the loan taken by the company. It requires mandatory interest payments. Non-repayment of interest and principal increases default risk. It will have due date of repayment of principle unlike common stocks.

Hence, correct option is (b) debentures.