What is the straight-line amortization technique for a bond discount or premium?

Q: determine the current market value of the bond.

A: Bond valuation is a method of finding the fair value of the bond. Fair value means the present…

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

A: This question explains about the fundamental assumptions that go into establishing the value of a…

Q: What is the excess of the issue price of bonds over their face amount called? premium discount…

A: Premium on Bonds: When bond market costs higher than its face value then bonds is called at premium.…

Q: What is the relationship between bond prices and interest rates? Describe the process of…

A: Bond price: The present discounted value of a bond's future cash flow is known as the bond price.…

Q: What factors affect the market rates for bonds?

A: In general, the supply of and demand for bonds affect market rates. The market rate for particular…

Q: What is the cost of a long-term investment in bonds?

A: Bond: Bonds are long-term debt issued with the defined terms and conditions. Bonds are generally…

Q: Why is the required rate of return on a bond different than the copoun rate

A: Bonds are the debt securities which are issued by the corporates or the government to raise the…

Q: What is the difference between face rate and market rate, and which rate would be higher if a bond…

A: There are many types of financial instruments issued to raise funds.

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: What effect does collateral have on a bond's interest rate? What effect does subordination have on a…

A: There are various factors that impact a bond's price. We discount back the future cash flows of a…

Q: The amortization on a bond premium:

A: The amortization on a bond premium: (d) Is calculated by multiplying the bond’s carrying value by…

Q: Will the amortization of Discount on Bonds Payableincrease or decrease Bond Interest Expense?…

A: There will be an increase in the interest expense due to the amortization of discount on bonds…

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 the contract rate and the market rate for bonds?

A:

Q: Why is the discount and premium on bond issues amortized?

A: The bonds can be issued at premium or discount on the basis of market rate of similar bonds.

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 would the carrying value of a bond payable be affected by the amortization for discoun and…

A: Bonds are a form of loan Or debt, which is being issued by the company, on which regular interest…

Q: What is the market rate on a bond?

A: Definition:   Bonds: Bonds are a kind of interest-bearing notes payable, usually issued by…

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: 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 return formula for bond?

A: Solution-      Bonds-                  A bond is a fixed financial gain instrument that represents a…

Q: Which of the maturity lengths between the bonds, bills, and notes would be most advantageous during…

A: Bear market is the market condition when it drops off 20% or more than market average. It occurs…

Q: What are bond issue costs? What is an underwriter?

A: Bonds: Bonds are a kind of interest bearing notes payable, usually issued by companies, universities…

Q: What is the dollar price of the bond?

A: Bond valuation is the process of determining the fair price of the bond. The fair price determines…

Q: Why discount and premium on issue of bonds is amortized?

A: Bonds are intangible assets, the amortization is similar to depreciation, it means systematically…

Q: What does it mean to amortize a bond premium or discount? Why is it necessary?

A: Introduction: A bond is a contract between the bond lender and the bondholders. The two most common…

Q: In regard to a bond discount or premium, what is the effective-interest amortization method?

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

Q: What is a clean and dirty price of a bond?

A: SOLUTION:- The clean price of a bond refers to the price which does not includes accrued interest.…

Q: What happens when a bond's market rate is less than the stated rate?

A:

Q: Does the interest rate on a T-bond include a default risk premium? Explain.

A: Treasury bonds (T – Bonds) are the bonds which are issued by the U.S. Federal Government in form of…

Q: What is the relationship between a bond's coupon rate and its current market interest rate

A: The annual interest rate paid to bondholders is known as the coupon rate. It's expressed in terms of…

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

A: Interest on bond is normally paid semi annually. When a bond is transferred in between these…

Q: What is the total rate of return on the bond?

A: Bonds are issued by various entities like corporates, municipal corporations, and governments of the…

Q: In regard to a bond discount or premium, what is the straight-line amortization method?

A: Straight-line amortization bondStraight line method of amortization is a process of amortizing…

Q: What are the two ways that discount and premium on bonds due are amortized? Each one should be…

A: Solution Two ways that discount and premiums on bond are amortized are as flows Straight line method…

Q: How do premiums and discounts on long-term debt securities affect interest expense?

A: Long term debts are used by the large organisations to raise the fund and utilise them for various…

Q: What is the difference between callable and putable bonds?

A: Bonds are debt instruments issued by a company that borrows from its lenders. They are issued at a…

Q: When the effective interest rate method is used, the amortization of the bond premium

A: Amortization of bond: The process of allocation and reduction of the discount or premium on bonds 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:…

Characteristics of Bonds