Question

Which of the following is true regarding the characteristics of debt and equity? A bond is...

Which of the following is true regarding the characteristics of debt and equity?

A bond is structured as a contract with fixed cash flows and maturity

A bond is an asset to the firm that issues it

Bond holders receive dividend

Stocks are considered short-term securities
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Answer #1

Solution

Answer-A bond is structured as a contract with fixed cash flows and maturity

A bond usually has fixed cash flow in form of coupons and a face value paid after a fixed time called maturity.The cash flows are fixed and the maturity time too in bonds

Wrong options

Stocks pay dividends bonds don't

Bonds are liabilities not assets for issuer

Stocks can be bought for long term too so cannot be called short term securities.

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