Indicate whether each of the following statements about bonds payable is true or false.a)A convertible bond may be converted into stock of the issuing company at the option of the bondholder.b)Businesses typically issue bonds to banks to borrow large amounts of cash.c)A debenture is an unsecured bond.d)Callable bonds may be turned in for early retirement at the option of the bondholder.e)The issuer of a bond receives cash when the bond is issued.

Question

Quizplus · Accepted Answer

b)False c)True d)False e)Ta)This is true. The bondholder, not the issuer, has the option of converting a convertible bond into stock.b)This is false. Businesses typically issue notes to banks to evidence borrowing arrangements.c)This is true. Debenture bonds are unsecured bond issued by large, established companies with excellent credit.d)This is false. The bond issuer, not the bondholder, has the option of calling a callable bond.e)This is true. The issuer of a bond receives cash and the bondholder pays cash when a bond is issued.

Indicate Whether Each of the Following Statements About Bonds Payable