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Indicate Whether Each of the Following Statements About Bonds Payable

Question 79

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Indicate whether each of the following statements about bonds payable is true or false.

Premises:
A debenture is an unsecured bond.
The issuer of a bond receives cash when the bond is issued.
A convertible bond may be converted into stock of the issuing company at the option of the bondholder.
Callable bonds may be turned in for early retirement at the option of the bondholder.
Businesses typically issue bonds to banks to borrow large amounts of cash.
Responses:
True
False

Correct Answer:

A debenture is an unsecured bond.
The issuer of a bond receives cash when the bond is issued.
A convertible bond may be converted into stock of the issuing company at the option of the bondholder.
Callable bonds may be turned in for early retirement at the option of the bondholder.
Businesses typically issue bonds to banks to borrow large amounts of cash.
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