Answer the following statements true (T) or false (F)
1. Refunding a bond occurs when the company sells more bonds of the same series with maturity and a coupon equal to the bonds sold earlier.
2. A bond can only be easily refunded if it has a call feature.
3. The costs of bond refunding are the call premium and the underwriting costs on the old and new bond issue.
4. The payment of a call premium may generally be taken as an immediate tax write-off.
5. The costs of bond refunding are the call premium and the underwriting cost on the new bond issue.
1. FALSE
-Refunding is the calling and elimination of the old bond by the issuing company.
2. TRUE
3. FALSE
-The underwriting cost on the OLD issue is not a cost of bond refunding.
4. TRUE
5. TRUE
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