Finra Exam Series-7 Topic 4 Question 85 Discussion

Actual exam question for Finra's Series-7 exam

Question #: 85
Topic #: 4

[All Series-7 Questions]

When a corporation issues a nonconvertible debenture, what is the effect upon its net worth?

Ait increases

Bif decreases

Cif is unchanged

Dnone of the above

Show Suggested Answer

Suggested Answer: C

it is unchanged. The debentures add to liabilities and to cash (an asset) received from the sale. There is no effect on net worth.

by Lazaro at Apr 19, 2024, 08:00 PM

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Thomasena

9 months ago

That's a good point, If the debenture is issued at a lower interest rate than the assets can yield, it could increase net worth.

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Flo

9 months ago

I see both sides. It really depends on how the debenture is structured and if it is backed by assets.

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Lamonica

10 months ago

I disagree, I believe it decreases the net worth of the corporation.

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Thomasena

10 months ago

I think when a corporation issues a nonconvertible debenture, it increases its net worth.

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Antione

10 months ago

Yes, that's right. It increases the net worth of the corporation.

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Genevive

10 months ago

So the correct answer would be A)

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Sherman

10 months ago

It increases.

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Richelle

10 months ago

When a corporation issues a nonconvertible debenture, what is the effect upon its net worth?

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