Fact Pattern 21-1
In 2005, Bettina opened Bettina Brownies in a shopping mall. The brownies were a hit and soon Bettina was operating shops in several malls in Illinois. By 2012 she had expanded operations to Indiana and she decided that it was time to finance expansion through the equity markets. With an investment banker, she prepared for the initial offering of Bettina Brownies. She sold 50,000 shares of stock at $10 a share.
Expansion continued. Keebler determined that Bettina was a well-run company with an attractive financial position. It began secret negotiations with Bettina to buy her interest in the business. News of the negotiations leaked. Mr. Little, CEO of Keebler, denied that they were pursuing a deal with Bettina. A month later Bettina sold her share of the business to Keebler.
Shortly before Bettina sold her interest to Keebler, Joe Kelso, a carpet cleaner was working at Bettina office when he overheard discussion of the sale to Keebler. Joe bought a large number of shares in Bettina. After the Keebler sale was completed, Joe sold his stock for a substantial profit.
-Refer to Fact Pattern 21-1. If Bettina received financing for her expansion by selling bonds rather than stock, which of the following items would Bettina bonds need to include?

Question

Quizplus · Accepted Answer

If Bettina received financing for her expansion by selling bonds, the bonds would need to include the rate of interest to be charged on the amount borrowed, the length of the period of indebtedness, the amount of the debt, and the method of repayment of the debt. All of these items are typically included in bond documents. Therefore, option E is the correct answer.

Fact Pattern 21-1 In 2005, Bettina Opened Bettina Brownies in a Shopping Mall