The several maturities dates are involved in the issued bonds if the company earnings are classified as ____________?
Correct answer: C. volatile
- A. parallel term income
- B. pledged
- C. volatile
- D. non-volatile
Explanation
When earnings are volatile, spreading bond maturities across several dates reduces the pressure of repaying the entire issue at one time. This is the rationale for using a staggered or serial maturity structure.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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