1. The financial leverage characteristic of long-term debt results in: a. a reduction of the risk that creditors will not be paid. b. a magnification of ROE relative to what it would be without long-term debt. c. a magnification of ROI relative to what it would be without long-term debt. d. the deductibility, for income tax purposes, of dividends to stockholders. 2. The market value of a bond is the sum of the present value of future interest payments and the present value of the amount to be repaid at maturity, discounted at: a. the market rate b. the coupon rate c. the dividend rate d. the prime rate 3. When a company issues a bond at a discount: a. the company will pay less than the face amount of the bond at its maturity b. the company will pay more than the face amount of the bond at its maturity c. the company's interest expense will be less than the interest paid each year d. the company's interest expense will be more than the interest paid each year. 4. The liability for product warranty claims is an example of a liability that: a. has been calculated using estimates b. has been recorded in the process of matching revenue and expense c. also resulted in a reduction of net income d. all of these