Which one of the following statements is true?
A) Debt instruments offer residual claims to future cash payouts.
B) Bonds with call provisions will have lower coupon rates than otherwise identical bonds.
C) Bondholders enjoy a direct voice in company decisions.
D) Bonds are low-risk investments that do well in inflationary periods.
E) Preferred shareholders are the first investors to be repaid in bankruptcy liquidation.
F) None of the above.

Question

Quizplus · Accepted Answer

All of the statements given are false. Debt instruments offer fixed or predetermined claims to future cash payouts, bonds with call provisions usually have higher coupon rates, bondholders do not have a direct voice in company decisions, bonds are not always low-risk investments and may suffer during inflationary periods, and preferred shareholders may not be the first investors to be repaid in bankruptcy liquidation.

Which One of the Following Statements Is True