Financial Management - Study Mode
[#436] A short-term lease which is often cancellable is known as:
Correct Answer
(C) Operating Lease
[#437] Bonds issued by local and state governments with default risk are
Correct Answer
(A) municipal bonds
Explanation
Solution: Bonds issued by local and state governments with default risk are municipal bonds. Municipal bonds are loans investors make to local governments.
[#438] Indexed bonds that are issued by linking payments to inflation are classified as
Correct Answer
(A) treasury inflation protected securities
Explanation
Solution: Indexed bonds that are issued by linking payments to inflation are classified as treasury inflation protected securities. Treasury Inflation-Protected Securities (TIPS) are a form of U.S. Treasury bond designed to help investors protect against inflation. These bonds are indexed to inflation, have U.S. government backing, and pay investors a fixed interest rate as the bond's par value adjusts with the inflation rate.
[#439] Bonds having zero default risk are classified as
Correct Answer
(D) treasury bonds
Explanation
Solution: Bonds having zero default risk are classified as treasury bonds.
[#440] Right held with corporations to call issued bonds for redemption is considered as
Correct Answer
(B) call provision
Explanation
Solution: Right held with corporations to call issued bonds for redemption is considered as call provision. A call provision is a provision on a bond or other fixed-income instrument that allows the issuer to repurchase and retire its bonds.