Question

True or False. Explain your answer:

1. 1.1) An annuity with an infinite life is called a perpetuity.

2. 1.2) The accounting equation states that assets plus liabilities equal equity

3. 1.3) A bond may only be issued by state governments.

4. 1.4 ) The dividend is the regular interest payment of the bond.

5. 1.5) The primary is the market of first sale in which companies first sell their authorized shares to the public.

Answer 1

1. True

When the payments are made for the lifetime or the infinite period of time then it is called as perpetuity

2. True

Assets = Liabilities + Equity

3. False

The Bonds are the debt instruments issued by the companies and the government both in order to raise funds for different purpose from the investors. The Company or the government do have to pay fixed rate of interest to the investors.

4. False

The regular payment made to the bond holder is known as the interest while the interest amount paid to the shareholders of the company are called as dividend, so this statement is false

5. True

The Primary market is the market where the company sell the securities to the investor for the first time For example, Initial public offer and when the investor exchanges the securities among one another on the stock exchange then it is known as secondary market.