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LOS d: Explain the provisions for redemption and retirement of bonds.
Q1. The refunding provision found in nonrefundable bonds allows bonds to be retired unless:
A) the funds come from a lower cost bond issue.
B) the funds come from the sale of new common stock.
C) market interest rates have increased substantially.
Q2. Which of the following statements regarding a sinking fund provision is most accurate?
A) It requires that the issuer retire a portion of the principal through a series of principal payments over the life of the bond.
B) It requires that the issuer set aside money based on a predefined schedule to accumulate the cash to retire the bonds at maturity.
C) It permits the issuer to retire more than the stipulated sinking fund amount if they choose.
Q3. On November 15, 2006, Grinell Construction Company decided to issue bonds to help finance the acquisition of new construction equipment. They issued bonds totaling $10,000,000 with a 6% coupon rate due June 15, 2026. Grinell has agreed to pay the entire amount borrowed in one lump sum payment at the maturity date. Grinell is not required to make any principal payments prior to maturity. What type of bond structure has Grinell issued?
A) Bullet maturity.
B) Serial bonds.
C) Income bonds.
Q4. Which of the following is the appropriate redemption price when redemption funds are obtained as a result of a forced sale of assets for deregulatory purposes?
A) Special redemption price.
B) Regular redemption price.
C) General redemption price.
Q5. Which of the following is the appropriate redemption price when bonds are called according to the sinking fund provision?
A) Special redemption price.
B) Specific redemption price.
C) Regular redemption price.
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发表于 2009-3-2 15:03
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