Qbank unit 3
Which of the following debt securities has interest that is subject to federal income tax but not state income tax? A) 26-week Treasury bill B) 180-day banker's acceptance C) 270-day revenue anticipation note D) 13-week commercial paper
A. 26-week Treasury bill
All of the following are considered money market instruments except A) American depositary receipts (ADRs). B) banker's acceptances (BAs). C) negotiable jumbo certificates of deposit (CD). D) commercial paper.
A. American depositary receipts (ADRs).
Which of the following is the lowest investment grade debt rating? A) BBB B) Aa C) BB D) A
A. BBB
A court has ordered a corporation to liquidate all assets under a federal bankruptcy proceeding. Which of the following is true? A) Debtholders are paid before stockholders. B) Preferred stockholders are paid before debtholders. C) There is no priority for the payment of wages to employees. D) Common stockholders are paid before preferred stockholders.
A. Debtholders are paid before stockholders.
Federal, state, and local income tax would be due on the interest from which of the following issues? A) GNMA certificate B) Los Angeles, California, general obligation bond C) Grant anticipation note issued by Jersey City, New Jersey D) 5-year Treasury note
A. GNMA certificate
Which of the debt issues listed here would produce taxable interest at all levels? A) Government National Mortgage Association certificate fully backed by the Treasury B) 90-day T-bill C) General obligation bond issued by the County of San Francisco, California D) General obligation bond issued by Puerto Rico
A. Government National Mortgage Association certificate fully backed by the Treasury
A bond having an 8% coupon is selling with an 8.25% yield to maturity. Which of the following statements are true? Nominal yield is higher than yield to maturity (YTM). Current yield is higher than nominal yield. Nominal yield is lower than yield to maturity (YTM). Current yield is lower than nominal yield. A) II and III B) II and IV C) I and IV D) I and III
A. II and III
How do zero coupons pay interest and how are they taxed? Pays annually Pays at maturity Taxed annually Taxed at maturity A) II and III B) I and III C) I and IV D) II and IV
A. II and III
Which of the following statements regarding Treasury receipts are true? Interest is paid annually. Interest is paid at maturity They are sold at a discount. They are sold at par.
A. II and III
Which of the following statements regarding a bond issued with a 6% coupon and now trading in the secondary market is true? A) If interest rates rise, the coupon will remain at 6%. B) If interest rates fall, the bond's current yield will rise. C) If the bond falls in price, the current yield will fall also. D) If interest rates rise, the bond's price also rises in the secondary market.
A. If interest rates rise, the coupon will remain at 6%.
Which of the following would be least likely to directly impact a bonds yield? A) Number of bonds in the issue B) Current interest rates C) Issuer's credit quality D) Time to maturity
A. Number of bonds in the issue
An investor purchased a corporate bond at 98⅝ and sold the bond at 101¾. How much money did he make or lose on this transaction? A) Profit of $31.25 B) Loss of $31.25 C) Profit of $3.125 D) Loss of $3.125
A. Profit of $31.25
Which of the following statements regarding put and call features on debt securities is correct? A) Put features benefit the bondholder. B) A callable bond is likely to be called when interest rates are rising. C) Call features benefit the bondholder. D) A putable bond is likely to be put back when interest rates are falling.
A. Put features benefit the bondholder.
All of the following are U.S. government agency debt securities except A) STRIPS. B) Farm Credit Administration securities. C) Government National Mortgage Association (GNMA) securities. D) Federal National Mortgage Association (FNMA) securities
A. STRIPS
An investor who is seeking income might choose a corporate bond because A) a corporate bond pays a steady income and are generally reliable. B) bonds can grow faster than the rate of inflation. C) corporate bond interest is tax free. D) bonds pay a higher dividend than stocks.
A. a corporate bond pays a steady income and are generally reliable.
An investor has purchased bonds having a put feature attached. With this put feature, it is likely that these bonds were issued with A) a lower coupon than similar bonds without the feature. B) a coupon that will be called away by the issuer before maturity. C) a coupon that need not reflect the impact of the call feature. D) a higher coupon than similar bonds without the feature.
A. a lower coupon than similar bonds without the feature.
A corporation wanting to raise cash to finance accounts receivable and seasonal inventory needs is likely to issue any of the following except A) bonds. B) prime paper. C) commercial paper. D) promissory notes.
A. bonds
All of the following are names for the rate stated on the face of the bond except A) current yield. B) coupon rate. C) fixed rate. D) nominal yield.
A. current yield
If interest rates are changing, which of the following terms would best describe the relationship between prices and yields for corporate bonds? A) Inverse B) Adverse C) Coterminous D) Reverse
A. inverse
When the interest rates in the marketplace moves up or down, the price of all bonds move A) inversely. B) conversely. C) subversely. D) reversely.
A. inversely
An investor holds a 4% bond, callable in 8 years, and maturing in 12 years. The bond's current yield (CY) measures its annual coupon payment relative to A) its market price. B) par value. C) its value at maturity. D) its value when callable.
A. its market price
If a bond is purchased at a premium, the yield to maturity is A) lower than the nominal yield. B) higher than the current yield. C) higher than the nominal yield. D) the same as the current yield.
A. lower than the nominal yield.
T-bills are the U.S. government's A) short-term debt of 1 year or less. B) intermediate-term debt of 2-10 years. C) long-term debt of over 10 years. D) only callable debt.
A. short-term debt of 1 year or less.
Which of the following projects would most likely be funded with a revenue bond? A) Sports stadium B) A city hall C) A county court house D) A public school
A. sports stadium
One of the major benefits of municipal bonds is A) they are tax free at the federal level. B) they are safer than any other bonds. C) they are always state and local-tax free. D) they pay a higher interest rate than similar corporate bonds.
A. they are tax free at the federal level.
Debt instruments put up for auction by the U.S. Treasury Department that offer intermediate maturities best describes A) Treasury notes. B) Treasury bills. C) Treasury bonds. D) anticipation notes.
A. treasury notes
An investor has purchased a bond with a 5% coupon. This investor will receive A) $5 annual interest until maturity. B) $50 annual interest until maturity. C) $50 interest payable at maturity. D) $50 semiannual interest payments.
B) $50 annual interest until maturity.
Which of the following is true for U.S. Treasury-issued securities? A) T-notes and T-bills pay interest annually. B) T-bills are purchased at a discount, while T- bonds are purchased as a percentage of par. C) T-bills and T-bonds pay interest semiannually. D) T-notes are purchased at a discount to par, while T-bonds are purchased as a percentage of par.
B, T-bills are purchased at a discount, while T- bonds are purchased as a percentage of par.
Commercial paper issued by corporations can have maturities as short or as long as A) 30 days or 360 days. B) 1 day or 270 days. C) 1 month or 3 months. D) 1 month or 6 months.
B. 1 day or 270 days
Which of the following bonds would be considered a high-yield bond? A) 4% BB-rated corporate bond maturing in 10 years B) 2% Treasury bond maturing in 12 years C) 4% A-rated bond maturing in 30 years D) 6% BBB-rated corporate bond maturing in 10 years
B. 4% BB-rated corporate bond maturing in 10 years
In what order would claimants receive payment in the event of a corporate bankruptcy? Holders of secured debt Holders of subordinated debt instruments General creditors Preferred stockholders A) I, II, III, IV B) I, III, II, IV C) III, I, II, IV D) IV, I, II, III
B. I III II IV
Of the debt and equity holders listed here, in what order would claimants receive payment in the event that a corporate bankruptcy liquidation needed to occur? Holders of secured debt Holders of subordinated debentures General creditors Preferred stockholders A) III, I, II, IV B) I, III, II, IV C) IV, I, II, III D) I, II, III, IV
B. I III II IV
Yield to call (YTC) calculations reflect the early redemption date and acceleration of the discount gain if the bond was originally purchased at a premium. acceleration of the discount gain if the bond was originally purchased at a discount. accelerated premium loss if the bond was originally purchased at a premium. accelerated premium loss if the bond was originally purchased at a discount. A) I and IV B) II and III C) I and III D) II and IV
B. II and III
For revenue bonds issued by a state or municipality, which of the following is true? A) Interest and principal payment is guaranteed. B) Interest will be paid only if the enterprise owned and operated by the state or municipality has sufficient earnings to cover the interest payments or the debt service reserve. C) The bonds carry an unqualified promise to pay interest and principal backed by the power of the issuer to levy taxes. D) Interest and principal payment is backed by the full faith and credit of the issuer.
B. Interest will be paid only if the enterprise owned and operated by the state or municipality has sufficient earnings to cover the interest payments or the debt service reserve.
Your customer is a resident of the State of California. Which of the following debt issues would generate interest that would be taxable to your customer at the state level but not taxable at the federal level? A) 10-year STRIP B) Phoenix, Arizona, Municipal Water District revenue bond C) Los Angeles County, California, general obligation bond D) California Steel, Inc., debenture
B. Phoenix, Arizona, Municipal Water District revenue bond
A bank issues and guarantees certificates of deposit, and those that are negotiable are considered money market instruments. What makes a CD negotiable? A) A fixed interest rate B) Secondary market trading C) Backing by the banks good faith and credit D) Short-term maturity
B. Secondary market trading
BBB Corporation is liquidating under a Chapter 7 bankruptcy. What is the order of payout? A) General creditors, senior bond holders, preferred shareholders, and common shareholders B) Secured, not Senior bond holders, general creditors, preferred stock holders, and common shareholders C) Common shareholders, preferred shareholders, general creditors, and senior bond holders D) Senior bond holders, preferred shareholders, common shareholders, and general creditors
B. Secured, not Senior bond holders, general creditors, preferred stock holders, and common shareholders
Which of the following statements regarding $1,000 par value 6.5% bond trading offered at 110 is true? A) The bond's yield to maturity (YTM) and stated yield are the same. B) The bond's current yield equals $65 ÷ $1,100 or 5.9%. C) The bond's current yield is lower than its yield to maturity (YTM). D) The bond is offered at a discount.
B. The bond's current yield equals $65 ÷ $1,100 or 5.9%.
Which of the following regarding Treasury STRIPS, receipts, bills, notes and bonds is true? A) They all pay semiannual interest payments. B) They all mature at par value. C) They are all backed by the good faith and credit of the U.S. government. D) They are all sold at a discount to par.
B. They all mature at par value.
Which of the following are securities representing other securities held on deposit with a trustee where the principal and interest payments have been separated? A) Treasury bills and notes B) Treasury receipts and STRIPS C) Treasury receipts, bills, and notes D) Treasury notes and bonds
B. Treasury receipts and STRIPS
Which of the following would be funded by general obligation (GO) bonds? A) Toll road B) A new city hall C) College dorm D) Public housing
B. a new city hall
Your client is about to retire and wants to rearrange his portfolio in order to have predictable income. Which of the following would not be a good investment vehicle? A) U.S. Treasury notes B) Adjustment bonds C) AA-rated debentures D) AA-rated mortgage bonds
B. adjustment bonds
Treasury bills pay A) monthly interest payments. B) all interest at maturity. C) semiannual interest payments. D) annual interest payments.
B. all interest at maturity
An income bond is also known as A) a debenture and is secured. B) an adjustment bond and is unsecured. C) a debenture and is unsecured. D) an adjustment bond and is secured.
B. an adjustment bond and is unsecured.
When interest rates in the open market move up or down, a bond's coupon rate will A) move with the open-market interest rates. B) be unaffected by the open-market interest rates. C) be adjusted to match the open-market rates. D) move inversely to the open-market interest rates.
B. be unaffected by the open-market interest rates.
A corporation deposits 20-year Treasury bonds into a trust in order to secure a loan. The loan for this type of arrangement would be facilitated by the corporation issuing A) Treasury guaranteed bonds. B) collateral trust bonds. C) equipment trust certificates. D) mortgage bonds.
B. collateral trust bonds.
Which of the following securities carries the greatest amount of risk in conjunction with a corporate liquidation? A) Debentures B) Common stock C) Preferred stock D) Corporate bonds
B. common stock
Regarding bankruptcy proceedings, A) liquidation of assets must occur first before the courts can offer protection from creditors. B) courts protect both corporate and individual filers from creditors. C) the procedure is only available to individuals seeking protection from creditors and not business entities. D) a plan for reorganization must be submitted first before the courts can offer protection from creditors.
B. courts protect both corporate and individual filers from creditors.
For a corporate bond, once issued, nominal yield A) moves in the same direction as current interest rates. B) does not change in response to interest rate movements. C) will always be equal to current yield. D) has an inverse relationship to current interest rate movements.
B. does not change in response to interest rate movements.
A customer receives interest from a T-note. They will likely owe income taxes on this income at what levels? A) Neither state nor federal B) Federal but not state C) State but not federal D) Both state and federal
B. federal but not state
An investor holds a 5% bond callable in six years and maturing in eight years. The bond's current yield (CY) measures its annual coupon payment relative to A) par value. B) its market price. C) its value when callable. D) its value at maturity.
B. its market price
A bond has been structured so that the principal of the entire issue matures on a single date. This is what type of bond? A) Balloon B) Term C) Serial D) Single maturity
B. term
Your customer owns four corporate bonds, all maturing in 10 years. They have different bond ratings. Which likely pays the least interest? A) The Ba-rated bond B) The A-rated bond C) The BBB-rated bond D) The BB-rated bond
B. the a rated bond
The coupon rate on a debt security represents A) the principal amount loaned to the issuer. B) the interest rate the issuer has agreed to pay the investor. C) the principal amount due to the investor at maturity. D) the interest rate the investor has agreed to pay the issuer.
B. the interest rate the issuer has agreed to pay the investor.
It would be expected that a repurchase (repo) agreement contract would include A) the maturity date only. B) the repurchase price and the maturity date. C) the repurchase price and the rate of return. D) the rate of return and maturity date.
B. the repurchase price and the maturity date.
Holders of subordinated debt instruments know that in the case of a corporate liquidation, they A) will be paid only after common shareholders claims are satisfied. B) will be paid back last of all debtholders. C) have no priority claim on assets. D) must be paid, regardless of any other claims being met.
B. will be paid back last of all debtholders.
Which of the following is the most junior security? A) Equipment trust certificates B) Preferred stock C) Subordinate debentures D) Collateral trust certificates
B.Preferred stock
-Which of the following debt securities has interest that is subject to federal income tax but not state income tax? A) 30-year debenture B) 30-year revenue bond for a toll bridge C) 10-year STRIP D) 30-year general obligation (GO) bond
C. 10-year STRIP
An investor purchases an 8% corporate bond at 93. The bond is scheduled to mature in 2028. What will the investor receive at maturity? A) $1,000 B) $930, plus 8% on the invested funds C) $1,040 D) $1,080
C. 1040
Each year a bond pays semiannual interest payments of $20. This bond has a nominal yield of A) 20%. B) 1%. C) 4%. D) 2%.
C. 4%
Which of the following is a reason an investor might choose to invest in a corporate bond? A) Corporate bond interest is tax-free. B) Bonds pay a higher dividend than stocks. C) A corporation is legally obligated to pay interest on its bonds. D) Bonds can grow faster than the rate of inflation.
C. A corporation is legally obligated to pay interest on its bonds.
Most municipals pay interest that is tax free at the federal level. Which one of the following is a taxable municipal bond? A) GANs B) TANs C) BABs D) RANs
C. BABs
Rank the following investors from lowest to highest priority in liquidation. A) Secured debt, debentures, subordinate debentures, preferred stock, common stock B) Preferred stock, debentures, subordinate debentures, secured debt, common stock C) Common stock, preferred stock, subordinate debentures, debentures, secured debt D) Debentures, secured debt, preferred stock, common stock, subordinated debt
C. Common stock, preferred stock, subordinate debentures, debentures, secured debt
Which of the following is an unsecured corporate debt security? A) Collateral trust certificate B) Mortgage backed security C) Debenture D) Equipment trust certificate
C. Debenture
Which of the following is an example of an unsecured debt security? Debenture Preferred stock Mortgage bond Income bond A) II and IV B) I and III C) I and IV D) I and II
C. I and IV
Which of the following is not considered a money market instrument? A) Commercial paper B) Banker's acceptances (BAs) C) Money market funds D) Negotiable jumbo certificates of deposit (CDs)
C. Money market funds
For municipal debt issues, which of the following is true? A) General obligation (GO) bonds are self-supporting, while revenue bonds are backed by the municipality's good faith and credit. B) Both revenue bonds and general obligation (GO) bonds are backed by the municipality's good faith and credit. C) Revenue bonds are self-supporting, while general obligation (GO) bonds are backed by the municipality's good faith and credit. D) Neither general obligation (GO) nor revenue municipal issues are backed by the municipality's good faith credit.
C. Revenue bonds are self-supporting, while general obligation (GO) bonds are backed by the municipality's good faith and credit.
A "D" rating from Standard & Poor's indicates which of the following? A) The issuer has missed payment in the past but is current at this time. B) The issue is considered slightly speculative but appears financially sound at the moment. C) The issuer is in default. D) The issue is in good standing but is speculative.
C. The issuer is in default.
Which of the following is a debt instrument that pays no periodic interest? A) Treasury bonds B) Treasury notes C) Treasury STRIPs D) Corporate bonds
C. Treasury STRIPs
In safety of principal, municipal bonds are considered second only to A) corporate common stock issues. B) corporate preferred stock issues. C) U.S. government and agency bonds. D) AAA-rated corporate debt issues.
C. U.S. government and agency bonds.
If a bond is trading at a discount, which of the following rates is correctly ranked from high to low? A) Yield to call, current yield, nominal yield, coupon rate B) Coupon rate, current yield, yield to maturity, yield to call C) Yield to call, yield to maturity, current yield, nominal yield D) Nominal yield, yield to maturity, current yield, coupon rate
C. Yield to call, yield to maturity, current yield, nominal yield
A certificate stating a borrower's obligation to pay back a specific amount of money on a specific date to an investor is A) an ownership certification. B) a stock certificate. C) a bond. D) a bond or stock power.
C. bond
A corporation deposits T-bonds it owns into a trust in order to secure a loan. The loan for this type of arrangement would be facilitated by the corporation issuing A) treasury guaranteed bonds. B) mortgage bonds. C) collateral trust bonds. D) equipment trust certificates.
C. collateral trust bonds
With interest rates in the marketplace at 7%, it could be expected that in the secondary market, a bond carrying a 5% coupon would trade A) unaffected by the changing interest rates. B) only in accordance to supply and demand. C) downward in price. D) upward in price.
C. downward in price
To the benefit of the issuer, a callable bond is likely to be called when interest rates A) remain stable for long periods of time. B) rise. C) fall. D) are volatile moving both up and down over short periods of time.
C. fall
If investors have income listed as their investment objective, they would not hold which of the following securities in their portfolio? A) Preferred stock B) Corporate bonds C) Income bonds D) U.S. T-notes
C. income bonds
Municipal revenue bonds are A) subject to statutory debt limits but do not require voter approval. B) subject to statutory debt limits, which is why they require voter approval. C) not subject to statutory debt limits and do not require voter approval. D) not subject to statutory debt limits but must still have voter approval.
C. not subject to statutory debt limits and do not require voter approval.
A serial bond is best described as A) debt structured so that the principal of the whole issue matures at one time. B) bonds in which the principal is secured by food-quality grains. C) portions of bond principal scheduled to mature at intervals over a period of years until the entire balance has been repaid. D) the issuer repaying part of the bond's principal before the final maturity date, but paying off the largest portion of the bond at maturity.
C. portions of bond principal scheduled to mature at intervals over a period of years until the entire balance has been repaid.
Treasury bills (T-bills) are A) intermediate-term debt obligations issued monthly. B) intermediate-term debt obligations issued weekly. C) short-term debt obligations issued weekly. D) short-term debt obligations issued monthly.
C. short-term debt obligations issued weekly.
An investor lending money to an entity receives back the principal amount of the loan on A) the interest payment date. B) the record date. C) the maturity date. D) the payable date.
C. the maturity date.
The City of Chicago issued $200 million in GO debt five years ago. The bonds were issued with a 20-year maturity and carry a 5% coupon. Your client, who purchased one of these bonds on the initial offering, calls you to get a current quote. You respond that the bonds are selling at a slight premium. This means that A) the yield to maturity is higher than the current yield. B) the yield to maturity is equal to the current yield. C) the nominal yield is higher than the yield to maturity. D) the current yield is higher than the nominal yield.
C. the nominal yield is higher than the yield to maturity.
The City of Philadelphia issued $100 million in GO debt three years ago. The bonds were issued with a 20-year maturity and carry a 5% coupon. Your client, who purchased one of these bonds on the initial offering, calls you to get a current quote. You respond that the bonds are selling at a slight premium. This means that A) the current yield is higher than the nominal yield. B) the yield to maturity is equal to the current yield. C) the nominal yield is higher than the yield to maturity. D) the yield to maturity is higher than the current yield.
C. the nominal yield is higher than the yield to maturity.
All of the following are backed by the full faith and credit of the U.S. government except A) Treasury bills. B) Treasury bonds. C) Treasury receipts. D) Treasury STRIPS.
C. treasury receipts
Which of the following bonds likely carries the highest risk to the investor? A) 10% nonrated corporate bond B) 10% state general obligation (GO) bond C) 10% B-rated municipal revenue bond D) 10% D-rated corporate bond
D. 10% D-rated corporate bond
The current yield on a bond with a coupon (nominal) rate of 7.5% currently selling at 105½ is approximately A) 7.5%. B) 8.2%. C) 6.5%. D) 7.1%.
D. 7.1 A bond with a coupon rate of 7.5% pays $75 of interest annually. Current yield equals annual interest amount divided by bond market price, or $75 ÷ $1,055 = 7.109%, or approximately 7.1%.
Which of the following credit ratings are placed in order from highest to lowest? A) BAA, BA, B, CA B) AA, Aaa, Aa, A C) Baa, A, Caa, D D) Aa, A Ba, B
D. Aa A Ba B
Which of the following is not one of the three major credit rating agencies? A) Fitch Ratings, Inc. B) Moody's Investors Services C) Standard & Poor's Rating Service D) Best & Best Co., Inc.
D. Best & Best Co., Inc.
Subordinate debentures are senior to which of the following fixed income securities? A) Equipment trust certificates B) Mortgage bonds C) Collateral trust certificates D) Preferred stock
D. Preferred stock
A corporate bankruptcy liquidation took place. Of the following—general creditors, secured bondholders, subordinated debenture holders, accrued taxes—who was paid first and who was paid last? A) Secured bondholders first, general creditors last B) General creditors first, secured bondholders last C) Secured bondholders first, accrued taxes last D) Secured bondholders first, subordinated bondholders last
D. Secured bondholders first, subordinated bondholders last
Which of the following would all be considered the same regarding yields on debt instruments? A) Nominal, coupon, and yield to call B) Stated, nominal, and yield to maturity C) Nominal, yield to call, and yield to maturity D) Stated, nominal, and coupon yields
D. Stated, nominal, and coupon yields
Regular way settlement for Treasury bills is A) T+3. B) same day. C) T+2. D) T+1.
D. T+1
Which of the following regarding federal funds is true? A) These funds can provide long-term loans for Federal Reserve Board (FRB) members. B) These funds are the amount required to be held on reserve at the Federal Reserve Board (FRB). C) These funds can provide intermediate-term loans for Federal Reserve Board (FRB) members. D) These funds may be loaned from one Federal Reserve Board (FRB) member bank to another.
D. These funds may be loaned from one Federal Reserve Board (FRB) member bank to another.
Rank the following government-issued securities from shortest to longest maturity. A) Treasury bills, bonds, and notes B) Treasury bonds, notes, and bills C) Treasury notes, bills, and bonds D) Treasury bills, notes, and bonds
D. Treasury bills, notes, and bonds
A municipal bond has a coupon of 4.25%, and at the present time, its yield to maturity is 4.75%. From this information, it can be determined that the municipal bond is trading A) at a premium. B) at par. C) flat. D) at a discount.
D. at a discount
All of the following are true concerning convertible bonds except A) coupon rates are usually lower than nonconvertible bond rates of the same issuer. B) convertible bondholders are creditors of the corporation. C) if the common stock is above parity, the convertible feature will affect the price. D) coupon rates are usually higher than nonconvertible bond rates of the same issuer.
D. coupon rates are usually higher than nonconvertible bond rates of the same issuer.
An investor purchases a bond offered at par. The bond has a coupon rate A) less than its current yield. B) less than its yield to maturity. C) greater than its yield to maturity. D) equal to its current yield.
D. equal to its current yield
A maturity schedule that has relatively equal portion of the issue maturing at regular intervals over a multiyear period most likely has which type of bond? A) Series bond B) Term bond C) Balloon bond D) Serial bond
D. serial bond
A corporate bond has a stated yield set at the time of issuance. This stated yield is also known as A) the yield to maturity. B) the current yield. C) the yield to call. D) the coupon rate or nominal yield.
D. the coupon rate or nominal yield.
With a balloon maturity, A) the major portion of the principal debt is paid over scheduled serial maturity dates. B) interest only is paid on the serial dates with all principal paid on the final maturity date. C) only interest is paid on the final maturity date with principal paid on the serial dates. D) the major portion of the principal debt is paid on the final maturity date.
D. the major portion of the principal debt is paid on the final maturity date.
Once a corporate liquidation proceeding in court is underway, common shareholders know that A) they are guaranteed only payment of their initial investment. B) if preferred shareholders claims are met, their claims are guaranteed to be met. C) only if they are paid first, can bondholders have their claims met. D) they are not guaranteed to be paid back any amount.
D. they are not guaranteed to be paid back any amount.
