Assume that in January 2017, Vivendi announced a 1.2 billion bond issuance. The bonds have a coupon rate of 6.75% payable semiannually. Assume the bonds have been assigned credit ratings of BBB (stable outlook) by Standard and Poor's, Baa2 (stable outlook) by Moody's, and BBB (stable outlook) by Fitch. Which of the following is not true?

A. The yield on these bonds would have been lower if Standard and Poor's, Moody's, and Fitch had assigned higher credit ratings.

B. The periodic interest payment will be 40.50 million.

C. The coupon rate on these bonds would have been higher if Standard and Poor's, Moody's, and Fitch had assigned lower credit ratings.

D. The periodic interest expense will depend on the bond's yield.

E. None of the above

Heller Company issues $950,000 of 10% bonds that pay interest semiannually and mature in 10 years. What is the bonds issue price assuming that the bonds market interest rate is 14% per year?

Select one:

A. $ 748,714

B. $ 950,000

C. $ 751,788

D. $1,273,515

E. None of the above

Which of the following would not require the company to record an accrual on the balance sheet?

Select one:

A. The company owes $43,000 in wages to its employees for the previous two weeks.

B. Interest will be paid when a note payable matures in the following accounting period

C. Management believes a lawsuit against the company is meritless because they have never had a single complaint about dangerous side effects of their drug in two years.

D. The company knows that they will be fined for pollution as a result of their manufacturing process and can estimate the amount of the obligation.

E. None of the above

Caterpillar, Inc. discloses the following pension footnote in its 2016 10-K report (in millions):

U.S. Pension Benefits	2016
Change in benefit obligation
Benefit obligation, beginning of year	$15,792
Service cost	119
Interest cost	517
Plan amendments	---
Actuarial losses (gains)	767
Foreign currency exchange rates	---
Participant contributions	---
Benefits paid - gross	(970	)
Less: federal subsidy on benefits paid	---
Curtailments, settlements and termination benefits	(7	)
Benefit obligation, end of year	$16,218

The fair value of Caterpillars U.S. pension assets is $11,354 million as of 2016. What is the funded status of the plan, and how will this be reflected on Caterpillars balance sheet?

Select one:

A. The pension plan is underfunded by $6,804 million and is reported as a liability on the companys balance sheet.

B. The pension plan is overfunded by $4,438 million and is reported as an asset on the companys balance sheet.

C. The pension plan is underfunded by $4,864 million and is reported as a liability on the companys balance sheet.

D. The pension plan is underfunded by $4,438 million and is reported as a liability on the companys balance sheet.

E. The pension plan is overfunded by $4,864 million and is reported as an asset on the companys balance sheet.

During 2016, Abbott Laboratories decreased its discount rate used to calculate pension obligation from 4.3% to 3.8%. The effect on the company's pension expense for the year and pension obligation balance at year end is:

Select one:

A. No effect on pension expense, decrease pension obligation

B. Decrease pension expense, decrease pension obligation

C. Decrease pension expense, increase pension obligation

D. Increase pension expense, increase pension obligation

E. Increase pension expense, decrease pension obligation