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Bonds

Which of the following statements is true?

a. A bond that has a rating of AA is considered to be a junk bond.
b. A bond will sell at a premium if the prevailing required rate of return is less than the bond's coupon rate.
c. A zero coupon is a bond that is secured by a lien on real property.
d. The legal document that describes all of the terms and conditions of a bond issue is called a debenture agreement.

Solution Preview

a. A bond that has a rating of AA is considered to be a junk bond.

This is false since AA is an investment grade rating

b. A bond will sell at a premium if the prevailing ...

Solution Summary

The solution explains the correct alternative relating to bonds

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