2. Sadowski Brick Company issues a ten-year bond with a par value of $400,000 on January 1. Sadowski Brick Companys bond has a coupon rate of 6% per annum, paid semi-annually. The interest incurred by Sadowski every six months on this bond is:

a. $18,000

b. $24,000

c. $12,000

d. $300,000

3. __ Under the corporate form of business organization

a. a stockholder is personally liable for the debts of the corporation.

b. stockholders acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation.

c. the corporation is a separate business entity from its owners.

d. stockholders wishing to sell their corporation shares must get the approval of other stockholders.

4. ___ Harden Corporation issued a bond with a par amount of $500,000 and coupon rate of 7% per annum paid annually to finance the building of its new plant. Investors werent satisfied with the coupon rate and bought the bonds at a discount making the proceeds from the bond sale $460,000. When the bond matures in 15 years, how much principal will the Harden Corporation have to pay investors? (No principal payments will be made before maturity.)

a. $460,000.

b. $500,000.

c. $35,000.

d. $250,000.

5. __ A company that is financially leveraged is one that

a. has a high earnings per share.

b. contains debt financing.

c. contains equity financing.

d. has a high current ratio.