Moving to another question will save this response.Quèstion 6In bond financing, if the interest on bonds (contract rate) higher than the market interest rate; the bonds will be issued with:O A. par value.O B. premium on bonds payable.OCa specific maturity date.O D. discount on bonds payable.

Bonds Bonds are those fixed-income instruments that are used by states, companies, municipalities,…

Answered: Question 6 In bond financing, if the…

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter11: Notes, Bonds, And Leases

Section: Chapter Questions

Problem 3Q

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When a bond sells at a discount, the carrying value ________ after each amortization entry. A. increases B. decreases C. stays the same D. cannot be determined
Use the worksheet to compute the bond issue price and amortization schedules if the effective interest rate is 8.2%. Save the file as BONDS5. Print the worksheet when done. Also, repeat requirement 4 in the space provided below for this bond.
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 balance
Required:(a) If both bonds had a required rate of return of 10%, what would the bonds’ prices be?(b) Explain what it means when a bond is selling at a discount, a premium, or at its face amount (par value). Based on results in part (a), would you consider both bonds to be selling at a discount, premium, or at par?
From page 9-2 of the VLN, what is the first thing you want to identify when approaching a bond problem? Group of answer choices A. Annual bond or semiannual bond B. Whether the market rate is different from the stated rate. C. The cash flows provided by the bond. D. The company's debt to equity ratio.
4. When the market rate of interest is greater than the contract rate ofinterest, the bonds should sell at a. a premium b. par value c. a discount d. par value
Refer to Chapter 10, page 567: Stated rate of interest versus the market rate of interest Required Indicate whether a bond will sell at a premium (P), discount (D), or face value (F) for each of the following conditions: ____ The stated rate of interest is higher than the market rate. ____ The market rate of interest is equal to the stated rate. ____ The market rate of interest is less than the stated rate. ____ The stated rate of interest is less than the market rate. ____ The market rate of interest is higher than the stated rate
From page 9-4 of the VLN, what causes the bond liability for a bond issued at a premium to decrease each interest payment period? Group of answer choices A. Paying the interest. B. The amortization of the premium. C. Paying the principal. D. The bond liability does not decrease when a bond is issued at a premium.
Please answer each of the following questions in detail. Make sure to provide examples for each of the questions below. 1. Please explain the terms associated with the bonds, namely, corporate bond, municipal bond , treasury bill, par value, coupon rate, coupon payment, time to maturity, prevalent interest rate, market value and yield to maturity (YTM). 2. Explain and provide examples of how variations in the prevalent interest rate affects market value of a bond. Kindly answer both the subparts WITH EXAMPLES.
6. Which of the following is true of demand bonds?a. They give the issuer the right to call the bonds at a preestablished price.b. They give the issuer the right to demand that the bondholders purchase additional bonds at a preestablished price.c. They give the bondholder the right to demand repayment prior to maturity.d. They give the bondholder the right of first refusal with respect to any additional bonds sold by the issuer. 7. Demand bonds should be reported as governmental fund liabilitiesa. if the government has not entered into a take-out agreement.b. if prevailing interest rates are higher than the interest rate on the bonds.c. if prevailing interest rates are lower than the interest rate on the bonds.d. if the government, by the time it issues its financial statements, has neither refinanced the bonds nor entered into an agreement to do so.
Which of the following would be included in the journal entry to show the conversion of bonds payable with additional consideration (a 'sweetener ' to encourage bondholders to sell their bond back )? (NIE 13) A debit to conversion expense debit to common stock A debit to cash A debit to bond discount
Given the information below, which bond(s) will be issued at a discount? Bond 1 Bond 2 Bond 3 Bond 4 Stated Rate of Return 5% 9% 11% 10% Market Rate of Return 7% 7% 11% 13% Multiple Choice Bond 1. Bond 2. Bond 3. Bonds 1 and 4.

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Question 6 In bond financing, if the interest on bonds (contract rate) higher than the market interest rate; the bonds will be issued with: O A. par value. O B. premium on bonds payable. Oc. a specific maturity date. O D. discount on bonds payable.