chapter 15

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False

Bond interest payments are not a tax deductible business expense.

True

Generally interest on corporate bonds is paid every six months.

False

The only way in investor can make money on a bond investment is to hold the bond until maturity.

True

A bond backed by the full faith credit and unlimited taxing power of the municipality that issued it Is called a general obligation bond.

True

A bond that is backed only by the reputation of the issuing corporation is called a Debenture bond.

True

A convertible bond is a bond that can be exchanged at the owners option for a specified number of shares of the corporation common stock.

True

A corporate bond is a corporations written pledge that it will repay a specified amount of money with interest.

True

A mortgage bond is a corporate bond that is secured by various assets of the issuing firm.

True

A registered bond is a bond whose ownership is registered in the owners name by the issuing company.

True

A sinking fund is a fund to which deposits are made each year for the purpose of redeeming a bond issue.

False

A subordinated debenture is a more Secure investment than a mortgage bond.

True

Hey revenue bond is a bond that is repaid from the income generated by the project it is designed to finance.

False

If overall interest rates in the economy fall than a corporate bond with a fixed interest rate will decrease in value.

False

Mortgage bonds are somewhat risky so they pay a higher return to investors.

True

The legal conditions for a corporate bond are described in the bond indenture.


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