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?

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 Ardella at Jul 11, 2024, 05:32 PM

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Haydee

4 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

3 months ago

Haha, good one about the helium debenture! But yeah, it does decrease.

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Richelle

3 months ago

I think you're right, net worth decreases with nonconvertible debentures.

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Margart

4 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

4 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

4 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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