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Chapter 14: Q1Q (page 752)

Question: (a) From what sources might a corporation obtain funds through long-term debt? (b) What is a bond indenture? What does it contain? (c) What is a mortgage?

Short Answer

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Answer

  1. By issuing bonds as well as by signing of long-term mortgages and notes.
  2. A bond indenture is an agreement made in contract between the issuer of the bonds as well as the bondholders and is signed by the bond issuer.
  3. A mortgage is an agreement made between borrower and the lender that provides the right to the lender to take one’s property in case of failure of amount borrowed inclusive of interest.

Step by step solution

01

Meaning of long-term debt

Long-term debt is a debt that gets matured within a year and its treatment differs with that of the short-term debt.

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