Bonds are short-term debt issued to multiple lenders called bondholders, usually in increments for $1,000 per bond |
FALSE |
Which of the following is the amount the borrower must pay back to the bondholders at maturity? |
Principal amount |
The date on which the principal amount is repaid to the bondholder is known as |
Maturity date |
The reason investors buy bonds is to |
Earn interest |
Term bonds all mature at the same specified time |
TRUE |
The amount of cash interest the borrower pays each year is based on the |
Stated interest rate |
Which of the following describes a serial bond? |
A bond that matures in installments at regular intervals |
Which of the following describes a secured bond? |
A bond that is back by issuers specific assets |
Which of the following describes a debenture? |
A bond that is not backed by specific assets |
Which of the following statements id true of a bond that is issued at a discount? |
The bond will be issued for an amount less than face value |
Which of the following statements is true of a bond that is issued at a premium ? |
The bond will be issued at an amount about face value |
When a bond is issued at a price higher than the face value, the difference is known as |
Premium |
Which of the following concepts represents time value of money? |
The concept that money earns interest over time |
A bond is issued at premium |
When a bonds stated interest rate is higher than the market interest rate |
A bond is issued at discount when a bonds stated interest rate is |
Less than market interest rate |
The interest rate that determines the amount of cash interest the borrower pays and the investor receives each year is called |
Stated interest rate |
The interest rate on which cash payments to bondholders are based is this |
Stated rate |
Which of the following statements is true if a bond is issued for an amount equal to its face value? |
The bonds stated interest rate is the same as the prevailing market interest rate at time of sale |
Accounting 2 chapter 14
Share This
Unfinished tasks keep piling up?
Let us complete them for you. Quickly and professionally.
Check Price