An affirmative covenant is most likely to stipulate: Limits on the issuer’s leverage ratio. How the proceeds of the bond issue will be used. The maximum percentage of the issuer’s gross assets that can be sold.
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- An affirmative covenant is most likely to stipulate:
- Limits on the issuer’s leverage ratio.
- How the proceeds of the bond issue will be used.
- The maximum percentage of the issuer’s gross assets that can be sold.
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- In U.S. GAAP, bond issue costs are considered ________. Group of answer choices a period cost a cost of borrowing that reduces the effective interest expense an initial cost that is expensed when the bonds are issued an element in determining the carrying value of the bonds outstandingWhich of the following is true regarding a bond? O The issuance must be approved by the board of directors. O The terms are set forth in a legal document called a bond indenture. O The contractual interest rate is also referred to as the stated rate. O All of the answer choices are correct.TRUE OR FALSE: The specific provisions of a bond issue are described in a document called a bond indenture.
- Bond premium should be reported in the statement of financial position A. at the present value of the future reduction in bond interest expense due to the premium. B. as a direct addition to the face amount of the bonds. C. as a deferred credit. D. along with other premium accounts such as those resulting from share capital transactions.How do you answer this question about the fair value of the bond? Detailed answer would be appreciated.In general, If you consider investing a bond, how is the issuer and guarantor information relevant for the value of this bond?
- To be effective issuing and investing in bonds, knowledge of their terminology, characteristics, and features is essential. For example: • A bond’s refers to the interest payment or payments paid by a bond. • A bond issuer is said to be in if it does not pay the interest or the principal in accordance with the terms of the indenture agreement or if it violates one or more of the issue’s restrictive covenants. • The contract that describes the terms of a borrowing arrangement between a firm that sells a bond issue and the investors who purchase the bonds is called . • A bond’s gives the issuer the right to call, or redeem, a bond at specific times and under specific conditions. Suppose you read an article about the Golden Gate Bridge and Highway District bonds. It includes the following information: Bridge Bonds Series A Dated 7-15-2005 4.375% Due 7-15-2055 @100.00 What is the issuing date of this bond? 7-15-2005 7-15-2055…What does the call provision for a bond entitle the issuer to do?The agreements and other terms of the contract between the issuer of the bonds and the one that lends the funds are established in: The surety contracts (bond indenture). Bond obligations (bond debenture). Registered bonds. Voucher coupon.
- Discuss whether holding a callable bond will always be beneficial for the investors.When the effective cost of debt is greater its the nominal cost, *a. The entity records a discount on the bond payable.b. the initial net measurement of the bond is more than the face value.c. The net proceeds is more than the face value.d. The interest expense is less than the interest payments.What is a bond indenture? What provisions are usually included in it?