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Which of the following statement is correct? A. The higher the debt to total assets ratio...

Which of the following statement is correct? A. The higher the debt to total assets ratio of a company, the lower the risk that the company may be unable to meet its maturing obligations and the better of the company’s solvency ability. B. The higher the times interest earned ratio, the worse of the company’s solvency ability. C. A bond’s stated rate is 8% and the effective market rate is 6%. Theoretically, the bond should be issued at premium. D. A bond’s stated rate is 7% and the effective market rate is 10%. Theoretically, the bond should be issued at premium.

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Answer #1

Answer :- D

When the market rate of bond is less than the stated rate then the bond should be issued at premium.

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