11, State Street Beverage Company issues S805.000 of 9%, 10-year bonds on March
ID: 2597512 • Letter: 1
Question
11, State Street Beverage Company issues S805.000 of 9%, 10-year bonds on March 31, 2017. The bonds pay interest on March 31 and September 30. Which of the following statements is true? A) If the market rate of interest is 10%, the bonds will issue at a premium. B) If the market rate of interest is 10%, the bonds will issue at a discount. C) If the market rate of interest is 10%, the bonds will issue at par. D) If the market rate of interest is 10%, the bonds will issue above par. 12. The two basic sources of stockholders' equity are A) common stock and bonds B) common stock and preferred stock C) paid-in capital and retained earnings D) no-par and stated value stock 13. Treasury stock A) decreases the number of shares issued B) increases the number of shares issued C) increases the number of shares outstanding D) decreases the number of shares outstanding 14. Which of the following is true of dividends? A) Dividends are a distribution of cash, stock, or other property to stockholders. B) Dividends increase assets and decrease total stockholders' equity of a corporation. C) Dividend payments decrease paid-in capital. D) Dividend payments increase stockholders' equity hich of the following occurs when a 2-for-1 stock split is declared? ) The balance in Common Stock remains the same. The balance in Common Stock is reduced to half the original amount. The balance in Common Stock doubles The balance in Paid-in Capital in Excess of Par-Common doubles.Explanation / Answer
11. State Street Beverage Company issues… Which of the following Statements is true?
Answer: Option (B) If the market rate of interest is 10%, the bonds will issue at a discount
Explanation
Interest rate risk is the risk that changing interest rates will affect bond prices. When current interest rates are greater than a bond's coupon rate, the bond will sell below its face value at a discount. When interest rates are less than the coupon rate, the bond can be sold at a premium--higher than the face value.
12. The two basic sources of stockholder’s equity are
Answer: Option (C) Paid-in Capital and Retained Earnings
13. Treasury Stock…….
Answer: Option (D) decreases the number of shares outstanding.
Explanation
Treasury stock is a corporation's previously issued shares of stock which have been repurchased from the stockholders and the corporation has not retired the repurchased shares. The number of shares of treasury stock (or treasury shares) is the difference between the number of shares issued and the number of shares outstanding.
14. Which of the following is true of dividends?
Answer: Option (A) Dividends are a distribution of cash, stock, or other property to stockholders.
Explanation
A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, paid to a class of its shareholders. Dividends can be issued as cash payments, as shares of stock, or other property.
15. Which of the following occurs when a 2-for-1 stock split is declared?
Answer: Option (A) The balance in Common Stock remains the same.
Explanation
A stock split is a corporate action that increases the number of the corporation's outstanding shares by dividing each share, which in turn diminishes its price.
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