The creditors expect to be paid interest in exchange for lending their money. This periodical payment to the bonds is called as Select one: O A. Dividend B. Coupon C. Reserves D. None of the given option
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- A trasury security in which periodoc coupon interest payments can be seperate from eachother ad from the orinciple payment is called a: A. STRIP B. T-notes C. T-Bonds D. G. O. Bond E. Revenue bondWhich statement is FALSE regarding bonds?Select one:The pay back their face value within their maturity.They can be traded on secondary markets. Entitles its holder for cash inflows.When issued they increase the equity of the firm.In an interest rate swap borrower pays O a. Premium O b. Coupon cashflows O c. Repayment cashflows Od. Discount to cashflows
- A part) The principle repaid at the end of the loan is considered to be A) par value B) face value C) both d) none B part) While the cashflows generated from common stock looks like a perpetual bond, it is not a form of equity True or falseListed below are several terms and phrases associated with current liabilities. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it. 1. 2. Payable with current assets. 3. List A Face amount x Interest rate x Time. 4. a. b. Short-term debt to be refinanced with common stock. c. Present value of interest plus present value of principal. 5. Noninterest-bearing. 6. Noncommitted line of credit. 7. Pledged accounts receivable. 8. Reclassification of debt. 9. Purchased by other corporations. 10. Expenses not yet paid. 11. Liability until refunded. 12. Liability until satisfy performance obligation d. e. f. g. |h. I. J. k. 1. List B Informal agreement Secured loan Refinancing prior to the issuance of the financial statements Accounts payable Accrued liabilities Commercial paper Current liabilities Long-term liability Usual valuation of liabilities Interest on debt Customer advances Customer depositsWhich of the following does not impact the calculation ofthe cash interest payments to be made to bondholders?a. Face value of the bond.b. Stated interest rate.c. Market interest rate.d. The length of time between payments.
- Which of the following is true of a discount on bonds payable? it is a contra-stockholders’ equity account it is an account that appears only in the books of the investor it increases when amortization entries are made until it reaches its maturity it decreases when amortization entries are made until its balance reaches zero at the maturity dateThe method used to value a default-free zero coupon bonds (such as T-bills) requires that the interest is deducted from the face value of the bonds in advance. a.rediscounting b.market price c.forward price d.discount interestPremium on Bonds Payable has a debit balance. O is a contra account. is deducted from bonds payable on the balance sheet. is considered to be a reduction in the cost of borrowing.
- 1. To calculate a gain or loss on redemption of a bond, you compare a. The market interest rate to the contract rate b. The carrying value value of the bond to the proceeds received from the sale of the bond c. The income for the period d. The proceeds to the unamortized premium or discount 2. If the proceeds are greater than the carrying value, you will have a a. gain with a credit balance b. gain with a debit balance c. loss with a debit balance d. loss with a credit balanceThe time value of money is used in calculating bond prices because: Group of answer choices A - The company might choose to repay the bonds prior to their maturity date B - Bond investors receive future payments and purchase bonds with current dollars C - The amount to be repaid at maturity will change as market rates change D - Cash interest payments to bondholders will change as market rates changeWhen bonds are retired at maturity, ________. A. the carrying value always equals the face value B. the carrying value equals the face value plus the unamortized premium or less the unamortized discount C. the bondholders are paid the face value plus the unamortized premium or less the unamortized discount D. the entry to retire the bonds may include a gain or loss on retirement of bonds