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Finra Exam Series-7 Topic 5 Question 92 Discussion

Actual exam question for Finra's Series-7 exam
Question #: 92
Topic #: 5
[All Series-7 Questions]

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

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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 Ardella at Jul 11, 2024, 05:32 PM

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Haydee
3 months ago
Hey, is this a finance exam or a comedy show? I'm going with B, the net worth decreases. Unless the debenture is made of helium, then maybe it increases. Just kidding, of course!
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Dan
2 months ago
Haha, good one about the helium debenture! But yeah, it does decrease.
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Richelle
2 months ago
I think you're right, net worth decreases with nonconvertible debentures.
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Margart
3 months ago
I bet the answer is B. Decreases the net worth. What else would you expect from a debenture? It's like adding weight to a balloon - the net worth just goes down.
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Donette
3 months ago
Hmm, this one's tricky. I'll have to go with D. None of the above, because the net worth definitely doesn't increase. Maybe it's a trick question?
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Tamesha
3 months ago
I agree with Tamesha, I'll also choose D) none of the above.
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Kimberlie
3 months ago
I'm not sure about that. I'll go with D) none of the above.
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Willow
3 months ago
I think it's A) it increases.
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Kenny
4 months ago
I think the correct answer is A) it increases, because issuing a nonconvertible debenture adds to the assets of the corporation without affecting its liabilities.
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Kerry
4 months ago
I'm going with C. The net worth doesn't change because the debenture is nonconvertible. It's just a fancy way of saying it's not turning into equity.
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Mariko
2 months ago
Actually, it's B) it decreases because the debenture is a liability.
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Carli
2 months ago
I disagree, I believe it's C) it is unchanged.
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Belen
3 months ago
I think it's A) it increases.
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Felicidad
3 months ago
I'm with User2, I also think it's C) it is unchanged.
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Eladia
3 months ago
I disagree, I believe it's C) it is unchanged.
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Lynsey
4 months ago
I think it's A) it increases.
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Lawana
4 months ago
I'm not sure, but I think it might be unchanged.
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Caren
4 months ago
Option B, of course! The debenture is a liability, so it decreases the net worth. Simple accounting, my friend.
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Stefania
3 months ago
Exactly, the debenture is a liability so it decreases the net worth.
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Frankie
4 months ago
B) it decreases
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Walton
4 months ago
I disagree, I believe it decreases the net worth of the corporation.
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Buddy
4 months ago
I think when a corporation issues a nonconvertible debenture, it increases its net worth.
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