Home / Questions / MULTIPLE CHOICE 1.Which of the following statements is true? a.A person who buys a

MULTIPLE CHOICE 1.Which of the following statements is true? a.A person who buys a

 

MULTIPLE CHOICE

 

1.Which of the following statements is true?

a.A person who buys a bond always pays the face value for the bond.

b.If a corporation issues a bond and Dennis buys it, Dennis becomes one of the owners of the corporation.

c.A stockholder of Firm X is one of the owners of Firm X.

d.The owner of the bond receives periodic payments equal to its coupon rate times the price he paid for the bond.

 

 

 

2.An IOU that promises to pay a certain amount at maturity, and also to pay periodic fixed amounts until that date, is called a(n)

a.stock.

b.equity.

c.bond.

d.futures contract.

 

 

 

3.The major components of a bond include all of the following except its

a.maturity date.

b.face value.

c.price.

d.coupon rate.

 

 

 

4.The face value of a bond is

a.the dollar amount that a person would receive if he or she were to sell the bond.

b.the dollar amount that a person would receive if he or she were to buy the bond.

c.the total value of payments that will be made over the course of the bond's life.

d.the dollar amount of the bond's final payment at maturity.

 

 

 

5.A bond is

a.a claim on the assets of a corporation such that the purchaser has an ownership right in the corporation.

b.anything of value to which the firm has a legal claim.

c.a means of assuring that the business firm will pay its debts or fulfill other legal obligations.

d.a promise to pay for the use of someone else's money.

 

 

 

6.When a person buys a bond of the XYZ Corporation, he or she can expect to

a.pay the corporation a certain amount of money each quarter of the year.

b.receive the face value of the bond each year and the face value of the bond when the bond matures.

c.receive the coupon rate times the face value of the bond each year and the face value of the bond when the bond matures.

d.receive the face value of the bond each year in perpetuity.

Dec 08 2019 Read more Less More

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