Regarding a bond's characteristics, which of the following is the principal loan amount that the borrower must repay? Multiple Choice maturity date time to maturity value par or face value call premium
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Q15
Regarding a bond's characteristics, which of the following is the principal loan amount that the borrower must repay?
-
maturity date
-
time to maturity value
-
par or face value
-
call premium
Step by step
Solved in 2 steps
- q13. The market price of a bond issued at a premium is the present value of its principal amount at the effective interestA. plus the present value of all future interest payments at the effective interest rate.B. plus the present value of all future interest payments at the stated interest rate on bond.C. minus the present value of all future interest payments at the effective interest rate.D. plus total amount of all future interest payment.( Fixed Income Securities) 18) F) Define the curvature of the term structure with respect to short-term, medium-term and long-term bonds and hence calculate the curvatures of the term structure at time t and time t+1 using the table below Term structure of interest rates Maturity Time t Time t+1 Short-term 3% 2% Medium-term 4% 5% Long-term 5% 4%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?
- 1) Define liabilities. Provide three examples. 2) Define bond discounts and premiums. Is 2022 a good time to purchase interest-sensitive securities? Please explain. 3) Distinguish between the straight line and effective interest methods. Which is acceptable under GAAP?Q23. Although all bonds have certain common characteristics, theses may differ because of different_______ Choices: A. contractual provisions B. duration C. bond valuation D. coupon discount rate E. No choice given23. The bond issue price is determined by calculating the a.future value of the stream of interest payments and the future value of the maturity amount. b.present value of the stream of interest payments and the present value of the maturity amount. c.future value of the stream of interest payments and the present value of the maturity amount. d.present value of the stream of interest payments and the future value of the maturity amount.
- 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 rateQUESTION 19 Which of the following is not a correct statement about the bond? Bond can be either non-interest-bearing or interest-bearing. Non-interest-bearing bonds sell at discount upon issuance. Price of a discount bond will go up as it approaches maturity. There is an inverse relation between the bond price and interest rate. Baseline interest rate for the bond market is LIBOR rate.Q8 Which of the following bonds carry significant risk that the issuer will not make current or future payments? Multiple Choice junk bonds liquidity rate risk bonds credit quality risk bonds interest rate risk bonds
- Ch 11 Bonds and LTL1. When will bonds sell at a premium and discount? 2. Calculate bond interest under SL method.3. Impact of amortization of bond premium/discount on interest expense.4. Give an example journal entry for amortization of bond premium/discount.5. What is the Gain/loss on redemption of bonds? How do you calculate?6. Understand method of calculating PV of future cash flows -specifically for a bond.7. Why are bonds a popular source of financing?8. Contract rate (market rate) is used for what calculation purpose?Ch 10 SE: Corporations1. What are Rights possessed by common stockholders?2. What are a journal entries for stock issuance, cash dividend, stock dividend?3. What is the calculation of dividends when cumulative preferred stock is outstanding?4. Journal entries for treasury stock, financial statement presentation. Gain/loss on reissue of treasury stock.5. Prior period adjustment - example of, accounting for?6. define, describe, why use Stock split 7. Stock dividend –…2. (T/F) A bond will trade at par at issuance and at maturity14. When is interest expense more than interest paid? a. when bonds are sold at a premiumb. when bonds are sold at parc. when bonds are sold at a discountd. when bonds are sold at a yield
