46. One of the points below is the most accurate? a. After a company files for bankruptcy, the administrator liquidates it, using the money to compensate bondholders, overdue salaries, royalties, and legal fees. b. Where the price of the bond approaches the sinking fund call price, a company with a sinking fund payout due will typically opt to purchase back bonds on the open market. c. Income bonds incur dividends only after the amount of interest received by the corporation is directly earned. As a result, these securities cannot default a corporation, making them better for investors than traditional bonds. d. One drawback to zero coupon bonds being that the tax gains from selling securities are not realised before the bonds maturity. e. Callable bonds should have a lower yield to maturity than noncallable bonds, assuming all other factors remain stable.
46. One of the points below is the most accurate?
a. After a company files for bankruptcy, the administrator liquidates it, using the money to compensate bondholders, overdue salaries, royalties, and legal fees.
b. Where the price of the bond approaches the sinking fund call price, a company with a sinking fund payout due will typically opt to purchase back bonds on the open market.
c. Income bonds incur dividends only after the amount of interest received by the corporation is directly earned. As a result, these securities cannot default a corporation, making them better for investors than traditional bonds.
d. One drawback to zero coupon bonds being that the tax gains from selling securities are not realised before the bonds maturity.
e. Callable bonds should have a lower yield to maturity than noncallable bonds, assuming all other factors remain stable.
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