Financial Management - Study Mode
[#456] Rate on debt that increases as soon market rises is classified as
Correct Answer
(B) floating rate debt
Explanation
Solution: Rate on debt that increases as soon market rises is classified as floating rate debt. A bond or other type of debt whose coupon rate changes with market conditions (short-term interest rates).
[#457] If market interest rate rises above coupon rate then bond will be sold
Correct Answer
(C) below its par value
Explanation
Solution: If market interest rate rises above coupon rate then bond will be sold below its par value. Once a bond is issued the issuing corporation must pay to the bondholders the bond's stated interest for the life of the bond.
[#458] Bonds that can be converted into shares of common stock are classified as
Correct Answer
(A) convertible bonds
Explanation
Solution: Bonds that can be converted into shares of common stock are classified as convertible bonds. A convertible bond is a fixed-income debt security that yields interest payments, but can be converted into a predetermined number of common stock or equity shares.
[#459] Type of bonds that are issued by foreign governments or foreign corporations are classified as
Correct Answer
(C) foreign bonds
Explanation
Solution: Type of bonds that are issued by foreign governments or foreign corporations are classified as foreign bonds. A foreign bond is a bond issued in a domestic market by a foreign entity in the domestic market's currency as a means of raising capital.
[#460] Specific day at which bond value is repaid can be considered as
Correct Answer
(D) maturity date
Explanation
Solution: Specific day at which bond value is repaid can be considered as maturity date. The maturity date is the date on which the principal amount of a note, draft, acceptance bond or other debt instrument becomes due.