Financial Management - Study Mode

[#1036] An unsecured bond that provides no lien against property as security for bond obligation is classified as
Correct Answer

(B) debenture

Explanation

Solution: An unsecured bond that provides no lien against property as security for bond obligation is classified as debenture. A debenture is a type of debt instrument that is not secured by collateral and usually has a term greater than 10 years. Debentures are backed only by the creditworthiness and reputation of the issuer. Both corporations and governments frequently issue debentures to raise capital or funds.

[#1037] Unsecured bonds which is designated for only notes payable or all other debts are classified as
Correct Answer

(D) subordinated bonds

Explanation

Solution: Unsecured bonds which is designated for only notes payable or all other debts are classified as subordinated bonds. Subordinated debt is a loan or security that ranks below other loans or securities with regard to claims on assets or earnings. Subordinated debt is also known as a junior security or subordinated loan.

[#1038] A market interest rate for specific type of bond is classified as bonds
Correct Answer

(A) required rate of return

Explanation

Solution: A market interest rate for specific type of bond is classified as bonds required rate of return.

[#1039] This type of risk is avoidable through proper diversification.
Correct Answer

(C) unsystematic risk

Explanation

Solution: Unsystematic type of risk is avoidable through proper diversification. Unsystematic risk, also known as specific risk or idiosyncratic risk, is a category of risk that only affects an industry or a particular company. Unsystematic risk is the risk of losing an investment due to company or industry-specific hazard.

[#1040] Financial analysts, working capital means the same thing as __________.
Correct Answer

(D) current assets minus current Liabilities

Explanation

Solution: Financial analysts, working capital means the same thing as current assets minus current Liabilities. Financial analyst is one of the most coveted roles in the financial services industry.