Multiple choice

1) What type of account classification is preferred stock?

A. Asset

B. Liability

C. Revenue

D. Equity

2) The relationship between the market rate of interest and the coupon rate of interest determines whether a bond will sell at a discount, at par, or at a premium.

A. True

B. False

3) If a bond is sold at a discount, the discount must be amortized into interest expense over the life of the bond.

A. True

B. False

4) A corporation may finance its assets by:

A. Using past profits

B. Issuing debt

C. Issuing equity

D. All of the above