Which of the following statements about financial markets and securities are true?
A) A bond is a long-term security that promises to make periodic payments called dividends to the firm's residual claimants.
B) A debt instrument is intermediate term if its maturity is less than one year.
C) A debt instrument is long term if its maturity is ten years or longer.
D) The maturity of a debt instrument is the time (term) that has elapsed since it was issued.

Question

Quizplus · Accepted Answer

A bond is a long-term security that promises to make periodic payments called interest to the bondholders, not dividends to residual claimants. A debt instrument is considered short-term if its maturity is less than one year, not intermediate. The maturity of a debt instrument is the length of time until the principal is scheduled to be repaid, not the time elapsed since issuance.

Which of the Following Statements About Financial Markets and Securities