Clip Joint company is ready to sell its bonds. Which of the following financial questions is most relevant to the issue of the bonds and that investors will most likely want answered before they purchased the bonds?

a) how many product lines did clip joint have last year?

b) what will be Clip Joint company's cost to start operations in another city?

c) How much debt does clip joint company already have?

Question

Business

Cobweb

Yesterday, 04:42

Clip Joint company is ready to sell its bonds. Which of the following financial questions is most relevant to the issue of the bonds and that investors will most likely want answered before they purchased the bonds?

a) how many product lines did clip joint have last year?

b) what will be Clip Joint company's cost to start operations in another city?

c) How much debt does clip joint company already have?

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Answers (1)

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Oscar Everett · Answer 1

(C) How much debt does clip joint company already have?

Explanation:

Bond investors are more likely to ask a bond issuer (the company issuing the bonds) its current level of debt before investing. This information is important as it informs the order that the current bond holders will occupy in a repayment hierarchy if the company was unable to pay back the debt and it needs to be liquidated.