11) Bonds payable issued with collateral are called:

A) debenture bonds.

B) serial bonds.

C) callable bonds.

D) secured bonds.

 

12) Bonds that may be redeemed at a certain price level are known as:

A) callable bonds.

B) debenture bonds.

C) serial bonds.

D) convertible bonds.

13) Dividends paid to stockholders are:

A) taxable to the recipient stockholder.

B) taxable to the corporation.

C) treated the same as bond interest.

D) None of these answers are correct.

 

14) Which of the following statements is true?

A) Bondholders would be paid before stockholders in a liquidation.

B) Dividends are required to be paid to stockholders.

C) Bondholders are owners while stockholders are creditors.

D) Stockholders receive a fixed interest while bondholders are paid only if earnings are sufficient.

 

15) The buyer pays the purchase price plus accrued interest since the last interest payment when:

A) the bond matures.

B) the bond is bought on an interest date.

C) the bond is bought between interest dates.

D) the bond is originally issued.

 

16) When the contract rate of interest on bonds is equal to the market rate of interest, bonds sell at:

A) a premium.

B) their face value.

C) their maturity value.

D) a discount.

17) For a corporation, a premium on bonds results when:

A) the contract rate is greater than the market rate.

B) the contract rate is less than the market rate.

C) the face value is greater than the effective rate.

D) None of these answers are correct.

 

18) When the market rate of interest on bonds is higher than the contract rate, the bonds will sell at:

A) a premium.

B) their face value.

C) their maturity value.

D) a discount.

 

19) A bond payable is similar to which of the following?

A) Accounts Payable

B) Accounts Receivable

C) Notes Payable

D) Cash

 

20) The interest rate specified in the bond indenture is called the:

A) market rate.

B) discount rate.

C) contract rate.

D) effective rate.

 

 



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