How does accrued interest on a bond affect the purchase price?

Q: What is indexed bond?

A: It is a bond with a interest rate which is connected to a index, for example, the bond market…

Q: What is Bond's interest income?

A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from…

Q: What effect do interest rates have on bond prices? What are the underlying assumptions that go into…

A: Bond: Bond refers to debt security issued by the company from the debt investors to raise capital.…

Q: When should debt security be classified as held-to-maturity?

A: Debt: A debt security should be classified as held to maturity only if the company has both the…

Q: Difference between regular bond and perpetuity bond?

A: Debt markets are markets where you contribute within the institutions or trade substances by the…

Q: . How is the value of a bond determined?

A: Bond valuation: It may be a method utilized to decide a given bond's hypothetical reasonable value.…

Q: When might a bondholder use a convertibility feature?

A: This question illustrates how a bondholder can benefit from the convertibility provision.

Q: What is meant by a bond indenture?

A: A Bond refers to an instrument that represents the loan being made by the investor to the company…

Q: How should discount on bonds payable be reported on the financial statements? Premium on bonds…

A: Concept: A premium on bonds occurs if, the bonds are issued at a high price than the face value. On…

Q: When a bond is issued, what is its present value?

A: The present value of the bond is the total of the present value of the bond's interest payments that…

Q: What are income bonds and indexed bonds?

A: The income bond is a type of debt instrument wherein the borrower is relied upon to pay just the par…

Q: How is the present value of a bond calculated?

A:

Q: What is the carrying amount of a bond?

A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from…

Q: what is the difference between bonds payable and accounts payable? explain your answer?

A: Bond payable and account payable both are liabilities of the company , which is to be paid in future…

Q: What is interest rate risk, and how does it relate to callable bonds? Explain using an example of…

A: This question discusses callable bonds.

Q: How are bonds reported when classified as trading securities?

A: Trading securities are those securities which are purchased or sold for trading purpose i.e. to make…

Q: How is the price of a bond (or bond issuance) determined?

A: solution concept coupon rate of bond               The coupon rate of the bond is the stated…

Q: What is a bond payable?

A: Long-Term LiabilitiesLong-term liabilities are the obligations of the business that need not be paid…

Q: What is the difference between the stated interest rate andthe market interest rate on a bond?

A: Interest: It can be defined as the cost that is paid by the borrower for using the money borrowed…

Q: Define capital gains yield (on a bond)

A: The formula to compute capital gain yield as follows:

Q: What is a bond indenture? What provisions are usually included in it?

A: Bond indenture: Its a written legal document.

Q: How is an interest payment on a bond calculated?

A: Bonds are debt instruments issued by corporations with a fixed interest rate(coupon rate) and…

Q: When does a discount on bonds payable occur?

A: Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various…

Q: what is the principal amount repaid at the maturity of a bond is called?

A: Bond is a debt instrument which is issued by corporates or governments to raise funds for any…

Q: What is a discount bond? A premium bond?

A: Bond: Bond is a kind of debt instrument typically issued by corporations, government organizations…

Q: What are bonds classified as?

A: Issue of bonds is a source of funds of a company. They are an acknowledgement of debt taken by the…

Q: What information is contained in a bond indenture? What purpose does it serve?

A:

Q: credit to Premium on Bonds Payable?

A: Premium on Bonds Payable is the amount at which it is issued in excess of par value. Premium on…

Q: Why would we record a bond a premium or discount?

A: Bond is a type of debt security which is issued by the bond issuer at the time taking debt from bond…

Q: What is the relationship between bond price and interest rate? Describe in fully how this…

A: Bonds are referred to as those investment securities which are issued by companies as units of…

Q: what is the difference between a debenture and a mortgage bond?

A: Bonds and debentures both are the fixed interest providing debt instruments issued by companies and…

Q: What steps would you take to purchase a bond and how would you secure a return?

A: Bonds are corporate debt units that are issued by firms and collateralized debt obligations as…

Q: Describe the process to record a bond a face value, discount value and premium?

A: Bonds payable are financial instruments. It representing a company’s commitment to pay back a…

Q: What is bond valuation? Give a detail explantion.

A: Answer

Q: How do you compute Macaulay's duration on a bond?

A: FORMULA TO CALCULATE Macaulay's duration on a bond DMacaulay's=∑T=1NC×T1+rT+M×N1+rNpricewhere,C =…

Q: How is the purchase of held-to-maturity debt security at face value recorded?

A: Hold-to-maturity Debt:  These are the investment in debt securities, where the investor wishes to…

Q: Are bonds considered as fixed income securities?

A: Bonds are a type of loan taken by the borrower that promises to pay a certain sum as an interest to…

Q: What is the effective-interest amortization mechanism for a bond discount or premium?

A: Method of interest amortization that is effective: Interest expenditure is calculated as follows:…

Q: What is the purpose of bond indenture?

A: Bonds:   Bonds are long-term promissory notes that are represented by a company while borrowing…

Q: What is the difference between a mortgage bond and a convertible bond?

A: Mortgage bond: A mortgage bond (also known as a secured bond) is a corporate bond that is secured by…

Q: Determine the selling price of the bonds

A: The selling price of the bonds is the present value of the cash payments to be made during the life…

Characteristics of Bonds