Brief Exercises

Evaluate statements about bonds.

BE$15\mathrm{.}1($LO $1)$ C State whether each of the following statements is true or false.

A disadvantage of issuing bonds is that it puts current shareholders at risk of losing full control oflie company:

Financial leverage is when a company borrows at one fate and invests at a different rate.

Bonds, like shares, may be bought by investors on organized securities exchanges.

Convertible bonds are also known as callable bonds.

The market rate is the rate investors demand for lending funds.