A) Multiple Choice (each question 2 points Total 20 points) < 1) Which of the following statements show trends that are favourable for a bondholder: < a) The company that issues the bond (debenture) goes bankrupt b) The company that issues the bond has an ambitious investment plan c) The company that issues the bond has a rising interest coverage ratio d) Market interest rates are steadily lower 2) Which of the following statements characterizes Liability < < a) The capital providers have no right to exercise control over business operations < b) The capital providers claims have priority in the event of liquidation of the company < c) Interest payable to the provider of capital is tax deductable < d) The obligation never matures < 3) Which of the following events require to record a liability? < a) A company produces and sells equipment with a 3 year warranty b) A service company receives paid revenues in advance for services delivered later this year < c) A company is sued and its attorney feels that this should result in a material loss next year of at least $ 5 Min. < d) An agricultural company is concerned its crops will be destroyed by the weather next year and the loss could be $ 25 Min. < 4) Which of the following statement is/are correct? < a) Bond interest payments are not deductable from income tax b) If interest rates rise the market price of a bond drops c) Bond interest payments are contractual payments, dividends are not d) A bond is in fact a loan cut into very small non transferable units < 5) Indicate which statement is true: < a) If the Coupon rate of a bond is higher than the Mortgage interest rate at the moment the bond is issued then the bond will be a issued as a Premium bond < b) If the Coupon rate of a bond is lower than the Market interest rate at the moment the bond is issued then the bond will be a issued as a Discount bond c) If the Mortgage interest rate of a bond is lower than the Coupon rate at the moment the bond is issued then the bond will be a issued as a Discount bond d) If the Market interest rate of a bond is higher than the Coupon rate at the moment the bond is issued then the bond will be a issued as a Premium bond