1. All other things being equal, the interest on secured debt is higher than that on unsecured debt.

a. True

b. False

1. From an accounting perspective, one of the advantages of a noninterest-bearing note is that there is no interest expense that must be reported on the income statement:

a.True

b. False

11. Which of the following are alternative names for the coupon rate (of interest)? (Sellect all that apply.)

a. Nominal rate.

b. Staled tale.

e Contract rate

d. Face rate.

e. Yield.

f. Market rate

1. The amount of periodic interest paid on a bond issue is determined by

a. The coupon rate

b. The market rate

c Both the coupon rate and the market rate.

d. Neither the coupon rate nor the market rate

1. When convertible bonds are exchanged for common stock, which of the following is true? (Select all that apply)

a. The debt to equity ratio will go down.

b. Inierest expense will decrease.

c. The times interest-eared ratio will go up.

d. The bonds will not have to be repaid at the maturity date.