Texas Foods has a 6 percent bond issue outstanding that pays $30 in interest every March and September.

Texas Foods has a 6 percent bond issue outstanding that pays $30 in interest every March and September. The bonds are investment grade and sell at par. The bonds are callable at a price equal to the present value of all future interest and principal payments discounted at a rate equal to the comparable Treasury rate plus 0.50 percent. Which of the following correctly describe the features of this bond? I. bond rating of B II. "make whole" call price III. $1,000 face value  IV. offer price of $1,000    A.  I and III only B.  III and IV only C.  I, III, and IV only D.  II, III, and IV only E.  I, II, III, and IV Refer to section 7.2

51.

Last year, Lexington Homes issued $1 million in unsecured, non-callable debt. This debt pays an annual interest payment of $55 and matures 6 years from now. The face value is $1,000 and the market price is $1,020. Which one of these terms correctly describes a feature of this debt?    A.  semi-annual coupon B.  discount bond C.  note D.  trust deed E.  collateralized Refer to section 7.2

52.

Callable bonds generally:    A.  grant the bondholder the option to call the bond anytime after the deferment period. B.  are callable at par as soon as the call-protection period ends. C.  are called when market interest rates increase. D.  are called within the first three years after issuance. E.  have a sinking fund provision. Refer to section 7.2