Ch 11 Review
The three (3) advantages that corporations have by issuing convertible bonds are:
Interest rates are lower. Convertible feature attracts investors who are interested in speculative gain. If the bond is converted, it no longer has to be redeemed at maturity.
A call feature allows the corporation to buy outstanding bonds from current bondholders ______ the maturity date.
before
A bond that can be exchanged, at the owner's option, for a specified number of shares of the corporation's common stock is called a:
convertible bond
A bond that is backed only by the reputation of the issuing corporation is called a:
debenture
A growth company
has no dividend
A corporate bond is a corporation's written pledge to repay a specified amount of money along with ____.
interest
What type of risk associated with preferred stocks or government or corporate bonds is the result of changes in the interest rates of the economy?
interest rate risk
A short-term loan that is approved before the money is actually needed is a(n):
line of credit
A debt security issued by a state or local government is called a:
municipal bond
Three (3) ways that the Internet can help you invest in bonds are:
price information research information online lower commission with online trades
A fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue is a _______.
sinking fund
A general obligation bond is a bond backed by the full faith, credit, and unlimited ____ power of the government that issued it.
taxing
As interest rates decreases bond prices increase.
true
As interest rates increases bond prices decrease.
true