You can distinguish the various types of bonds by their terms of contract, pledge of collateral, and so on. Identify the type of bond based on eachdescription given in the table that follows:DescriptionThese bonds are backed by real estate holdings and equipment, and if a company goesbankrupt, the collateral can be sold off to compensate for the default. These bonds, moreso than other collateralized securities, have prior claims over assets.These bonds are traded in the bond markets based on investors' belief that the issuer willnot default on the repayment. These bonds have no collateral and usually offer higheryields.These bonds are considered the riskiest of all corporate bonds and thus offer the highestinterest rates.Type of BondSubordinated debenturesBased on your understanding of bond ratings and bond-rating criteria, which of the following staBBB bonds usually have the lowest yields in the bond markets.O US government bonds usually have the lowest yields in the bond markets.Senior mortgage bondsSubordinated debenturesDebenturesJunior mortgage bondsIn 2008, the United States began to witness one of the worst recessions since the 1930s. The collapse of the housing bubble in 2006 led to a massivedecline in real estate prices, affecting consumers and institutions, especially banking and financial entities. Severe liquidity shortfalls in the UnitedStates as well as other global markets led to a serious credit crisis. During the credit crisis of 2008-2009, several banks and other businesses wentthrough a reorganization process or were forced to liquidate. Consider the following example:In January 2009, American electronics retailer Circuit City Inc. closed all of its stores and sold all of its merchandise.Source: "Circuit City to Shut Down." CNN Money. Cable News Network, n.d. Web. August 31, 2010. http://money.cnn.com/2009/01/16/news/companies/circuit_city so than other collateralized securities, nave prior claims over assets.These bonds are traded in the bond markets based on investors' belief that the issuer willnot default on the repayment. These bonds have no collateral and usually offer higheryields.These bonds are considered the riskiest of all corporate bonds and thus offer the highestinterest rates.Based on your understanding of bond ratings and bond-rating criteria, which of the following staO BBB bonds usually have the lowest yields in the bond markets.O US government bonds usually have the lowest yields in the bond markets.Senior mortgage bondsSubordinated debenturesThis is an example of:DebenturesIn 2008, the United States began to witness one of the worst recessions since the 1930s. The collapse of the housing bubble in 2006 led to a massidecline in real estate prices, affecting consumers and institutions, especially banking and financial entities. Severe liquidity shortfalls in the UnitedStates as well as other global markets led to a serious credit crisis. During the credit crisis of 2008-2009, several banks and other businesses wentthrough a reorganization process or were forced to liquidate. Consider the following example:O LiquidationO ReorganizationJunior mortgage bondsIn January 2009, American electronics retailer Circuit City Inc. closed all of its stores and sold all of its merchandise.Source: "Circuit City to Shut Down." CNN Money. Cable News Network, n.d. Web. August 31, 2010. http://money.cnn.com/2009/01/16/news/companies/circuit_city

You can distinguish the various types of bonds by their terms of contract, pledge of collateral, and so on. Identify the type of bond based on description given in the table that follows: Description These bonds are backed by real estate holdings and equipment, and if a company goes bankrupt, the collateral can be sold off to compensate for the default. These bonds, more so than other collateralized securities, have prior claims over assets. These bonds are traded in the bond markets based on investors' belief that the issuer will not default on the repayment. These bonds have no collateral and usually offer higher yields. These bonds are considered the riskiest of all corporate bonds and thus offer the highest interest rates. Type of Bond Subordinated debentures Based on your understanding of bond ratings and bond-rating criteria, which of the following sta O BBB bonds usually have the lowest yields in the bond markets. Senior mortgage bonds Subordinated debentures Debentures Junior mortgage bonds

You can distinguish the various types of bonds by their terms of contract, pledge of collateral, and so on. Identify the type of bond based on description given in the table that follows: Description These bonds are backed by real estate holdings and equipment, and if a company goes bankrupt, the collateral can be sold off to compensate for the default. These bonds, more so than other collateralized securities, have prior claims over assets. These bonds are traded in the bond markets based on investors' belief that the issuer will not default on the repayment. These bonds have no collateral and usually offer higher yields. These bonds are considered the riskiest of all corporate bonds and thus offer the highest interest rates. Type of Bond Subordinated debentures Based on your understanding of bond ratings and bond-rating criteria, which of the following sta O BBB bonds usually have the lowest yields in the bond markets. Senior mortgage bonds Subordinated debentures Debentures Junior mortgage bonds

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 2MC: A debenture is ________. A. the interest paid on a bond B. a type of bond that can be sold back to...

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The principal of a bond is ________. A. the person who sold the bond for the company B. the person who bought the bond C. the interest rate printed on the front of the bond D. the face amount of the bond that will be paid back at maturity
You can distinguish the various types of bonds by their terms of contract, pledge of collateral, and so on. Identify the type of bond based on each description given in the table that follows: Description Type of Bond These bonds are collateralized securities with first claims in the event of bankruptcy. These bonds are not backed by any physical collateral. They are backed by the reputation and creditworthiness of the issuing company. These bonds are considered the riskiest of all corporate bonds and thus offer the highest interest rates. Based on your understanding of bond ratings and bond-rating criteria, which of the following statements is true? During an economic recession and in a pessimistic environment, the yield spread between US government bonds and corporate bonds could be higher than during good economic times. During a period of economic growth and in an optimistic environment, the yield spread between US government…
A legal document that details the rights of bondholders and the issuer is called . If the legal document just described includes a sinking fund provision, is the bond considered to have more or less default risk, all else being equal? More default risk Less default risk You can distinguish the various types of bonds by their terms of contract, pledge of collateral, and so on. Identify the type of bond based on each description given in the table that follows: Description Type of Bond These bonds are backed by real estate holdings and equipment, and if a company goes bankrupt, the collateral can be sold off to compensate for the default. These bonds, more so than other collateralized securities, have prior claims over assets. These bonds are not backed by any physical collateral. They are backed by the reputation and creditworthiness of the issuing company. These bonds are considered the riskiest of all corporate bonds and thus…
More on types of bonds You can distinguish the various types of bonds by their terms of contract, pledge of collateral, and so on. Identify the type of bond based on each description given in the table that follows: Description Type of Bond These bonds are collateralized securities with first claims in the event of bankruptcy. Senior mortgage bonds,subordinate debentures, Junior Mortgage Bonds These bonds are not backed by any physical collateral. They are backed by the reputation and creditworthiness of the issuing company. Same as the above answer choices These bonds are considered the riskiest of all corporate bonds and thus offer the highest interest rates. Same as the above answer choices Based on your understanding of bond ratings and bond-rating criteria, which of the following statements is true? An indenture is a legal document that details the rights of bondholders. If the indenture includes a sinking funds provision, the bond…
To be effective issuing and investing in bonds, knowledge of their terminology, characteristics, and features is essential. For example: • A bond’s refers to the interest payment or payments paid by a bond. • A bond issuer is said to be in if it does not pay the interest or the principal in accordance with the terms of the indenture agreement or if it violates one or more of the issue’s restrictive covenants. • The contract that describes the terms of a borrowing arrangement between a firm that sells a bond issue and the investors who purchase the bonds is called . • A bond’s gives the issuer the right to call, or redeem, a bond at specific times and under specific conditions. Suppose you read an article about the Golden Gate Bridge and Highway District bonds. It includes the following information: Bridge Bonds Series A Dated 7-15-2005 4.375% Due 7-15-2055 @100.00 What is the issuing date of this bond? 7-15-2005 7-15-2055…
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