Tip

None of the above

Partnership

Company

Sole traders

When a company is liquidated, the proceeds from the company’s asset sales will be used to satisfy the obligations to stockholders. The amount that remains after all obligations to stockholders having been satisfied will go to senior bond holders and then junior bond holders

When a company is liquidated, the proceeds from the company’s asset sales will be used to satisfy the obligations to preference share holders. The remaining amount will go to senior bond holders and then junior bond holders.

When a company is liquidated, the proceeds from the company’s asset sales will be shared among stockholders only.

When a company is liquidated, the proceeds from the company’s asset sales will be used to satisfy the obligations to senior bond holders first, then junior bond holders. The amount that remains after all obligations to bond holders having been satisfied will go to stockholders

Managers who work to maximize the wealth of shareholders may take on investments that are too risky for bond holders. When those investments work out well, most of the benefits will go to shareholders. When the investments do not work out, it is the bondholders who lose their capital.

Most bond issues have bond covenants. However, it is often found that bond covenants do not have important effect on bond prices

Bond covenants provide protection to bond holders. When these covenants are violated, bond holders are allowed to redeem their principals.

Bond covenants increase the protection for bond holders. Investors are therefore willing to pay higher prices for the bonds. Bond covenants increase the bond price.

None of the above is incorrect

Adding the convertible feature to a bond will increase the value of the bond while adding the callable feature to a bond will decrease the value of the bond.

With a callable bond, the issuer can repurchase the bond at a pre-specified price before maturity if he/she wants

With a convertible bond, the bond holder can exchange the bond for a number of shares of the issuer if he/she wants

Yankee bonds are bonds that are denominated in US dollar and sold in US by non-US issuers

Bulldog bonds are bonds denominated in British pound and sold in UK by non-UK issuers

Eurodollar bonds are bonds denominated in US dollar and sold inside US

Samurai bonds are bonds that are denominated in Yen currency and are sold in Japan by non-Japanese issuers