7) (I) A coupon bond (not perpetual) is a debt security that promises to make payments...

7) (I) A coupon bond (not perpetual) is a debt security that promises to make payments periodically for a specified period of time.

(II) A stock is a security that would be a residual claim on the earnings and assets of a corporation.

A) (I) is true, (II) false.

B) (I) is false, (II) true.

C) Both are false.

D) Both are true.

Expert Solution

(D)

However, (II) is partially true.

A stock is a share in a corporation which, in case of liquidation, will be a residual claim on the assets of the corporation after paying off all the liabilities. However, earnings can be a measure to value a stock (but not in a situation of liquidation)

jeff jeffy answered 3 years ago

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