Which of the following is NOT TRUE? Select one: O a. If the stated rate is equal to the market rate on the issuance date of a bond, no premium or discount on the bond will need to be recorded. O b. Private companies are required to amortize bonds payable using the effective-interest method. O c. Public companies are required to amortize bonds payable using the effective-interest method. d. All of the listed answers are not true. Note

Which of the following is NOT TRUE? Select one: O a. If the stated rate is equal to the market rate on the issuance date of a bond, no premium or discount on the bond will need to be recorded. O b. Private companies are required to amortize bonds payable using the effective-interest method. O c. Public companies are required to amortize bonds payable using the effective-interest method. d. All of the listed answers are not true. Note

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter11: Notes, Bonds, And Leases

Section: Chapter Questions

Problem 7Q

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Which of the following is a disadvantage to a corporation issuing bonds? Group of answer choices A)The required interest payment must be met each period. B)The liquid nature of the bonds makes them attractive to investors who may not want to hold them to maturity. c)The large principal payment due at maturity. d)Both the first and third answers above are both disadvantages. e)The first, second and third answers above are all disadvantages.
PLEASE ANSWER ALL THE QUESTIONS AND THE IMAGE ATTACHED 1. a bond is a liability of the issuing company and a share represents part ownership in the company true false 2. There is no tax advantage with bonds when issued by companies True False 3. The Contract rate is also known as the coupon or stated rate that is identified in the indenture true false 4. The effective interest method of amortizing bonds allocates the same amount of expense to each period true false 5. there is an inverse relationship between market interest rates and bond prices true false 6. ABC company issued a bond on january 2 2020 with a face value of 800000 and sold at 775000. the bond is a discount bond true false 7. DEF Company issued a 5 year bond on january 2 2020 with a par value of 700000. the bond pays its investors every six months. the coupon rate is 6% and the market rate is 7%. How much coupon cash interest payment does DEF company pay its investors every six months 8. GHI Company issued a 7…
1. Under what conditions would the yield-to-maturity and current yield of a bond be equal? Group of answer choices a. The bond is priced at par b. The bond is priced at a discount c. Insufficient information d. The bond is priced at a premium 2. Which of the following is correct about the risk-free rate as used in valuing equity instruments? Group of answer choices a. The risk-free rate accounts for the rate of return or yield of a government instrument which does not carry any risk. b. The risk-free rate used for valuing equity instruments is normally the yield of a long-term government security. c. The risk-free rate used for valuing equity instruments is the same as that used for valuing short-term debt instruments. d. The risk-free rate accounts for the risks related to government securities which is composed of credit-spread, maturity risk premium and the real risk-free rate. 3. Berg Inc. has just paid a dividend of P2.00. Its stock is now selling…
Which of the following is correct? A. Bonds maturing at a specified single date are called ordinary bonds. B. Equity securities and debt securities differ only in their effect on a company’s cash flow. C. One purpose in holding bonds as a long-term investment is to provide the investor a voting voice in the management of the issuing company. C. On bonds, the yield rate and the nominal rate of interest are always different.
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Which of the following statements correctly describes aspects of simple interest as discussed in lectures? Group of answer choices A. More than one of the other statements are correct B. None of the other statements are correct C. loan that has been created that pays simple interest, will involve interest payments that are calculated on the basis of both the principal amount borrowed as well as any interest that has accumulated to date. D. By convention, simple interest is the main method used for the pricing of short-term debt securities like Treasury Notes. E. With simple interest, the future value of any cash flow is simply its current value discounted back at a rate of r% per period for n periods. I already know that C and D are compound interests however I am not sure about option E.
Which of the following events would make it more likely that a company would choose to call its outstanding callable bonds? a. Market interest rates rise sharply. b. Market interest rates decline sharply. c. The company's nancial situation deteriorates signicantly. d. Ination increases signicantly. e. The company's bonds are downgraded. Please explain.
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1. Which of the following is true about bonds payable?A. Bonds payable is always reported as a non-current liability.B. Bonds are usually issued as a form of stock financing.C. Coupon interest payments on term bonds fluctuate depending on the market rate on the dateof interest payment.D. It is possible that the total proceeds from the bond issuance equal its maturity value.2. Which of the following is NOT TRUE about bond interest?A. These are usually paid at designated coupon interest payment dates.B. If a bond is issued at a discount, interest payment is lower than interest expense for the sameperiod.C. If a bond is issued at a discount, interest payment increases over the life of the bond since thecarrying value increases.D. A bond issued at more than face value is a bond issued at a premium.3. At the maturity date, bonds are redeemed at:A. Original issue priceB. Face valueC. Market value on redemption dateD. Market value on redemption date, less any related costs4. If the market…
Which of the following statements relating to bonds is incorrect? A. A bond’s face value is the amount the issuer must pay to the bondholder at maturity. B. The owner of a registered bond is the person to whom interest payments are mailed. C. A bond will typically sell at a discount when its nominal rate is less than the current market rate of interest. D. A bond is a debt instrument giving the issuer flexibility as to maturity date.
Which of the following statements concerning bonds is FALSE? A. Bonds can be issued either at par, premium, or discount. B. Bonds interest is tax deductible. C. Bondholders have voting rights. D. Bonds are usually considered to be a long term liability.
Which of the following events would make it more likely that a company would choose to call it’s outstanding callable bonds? An increase in market interest rates. An increase in the call premium. All the other statements are correct. The company’s bonds are downgraded. A reduction in market interest rates.