No. 7

The time value of money is used in calculating bond prices because: Group of answer choices A - The company might choose to repay the bonds prior to their maturity date B - Bond investors receive future payments and purchase bonds with current dollars C - The amount to be repaid at maturity will change as market rates change D - Cash interest payments to bondholders will change as market rates change

Debt Securities - These securities are in the form of debt or borrowings which have to be repaid by the issuer to the holder of the securities. The issuers of debt securities have to pay interest in the form of coupons at a rate of interest.  Debt securities are a means of diversification and provide a predictable income stream to the holders. You mention "coupons" in you debt instrument discussion. Can you tell us more about these coupons? How do they work, where do we find them? Are they registered?

Question based on, "effective interest-method".   I have tried but unable to do it.

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.

Which of the following is not an effect of a call provision? A. Issuer can refund the bond issue if rates decline. B. Requires the issuer to pay off the loan over its life rather than all at maturity. C. Bond investors require higher yields on callable bonds D. Upon calling bonds the issuer must pay call premium to bond holder E. All of the above are effects of a call provision

The market interest rate... Select the word list below: is the contractual interest rate used to determine the amount of cash interest the borrower. is listed by the bond indenture. is the rate investors demand for loaning funds Answer is the rate investors demand for loaning funds paid by

Which of the following is NOT a form of long-term debt financing?   Question 12 options:   1)  Bond issue.   2)  Bank term loans.   3)  Accounts Payable.   4)  Leasing.

Please solve this practice problem.

Bonds are a common long-term debt instrument. They are interesting because they are issued with a stated interest rate. Unlike the market interest rates, a bond's stated interest rate will never change. The stated interest rate is what will be paid to the investor over the bond's life. This means that the only way to manipulate the total amount earned or paid from bonds is by adjusting the selling price: What does it mean when a bond is issued at a premium or a discount? How does the issuance cost affect the investor's earnings from the bond purchases? How is the company's recognized interest expense affected? Reminder: Use specific examples to support your analysis.

There are certain patterns we should expect to see on a bond amortization table. Complete the following statements regarding these patterns. Item Statements A. Assuming a term bond is issued at a premium, the cash interest payment calculated every period should: B. Assuming a term bond is issued at a premium, the interest expense amount calculated every period using the effective interest method should be C. Assuming a term bond is issued at a premium, the carrying value over time should be D. Assuming a term bond is issued at either a premium or a discount, the carrying value on the issuance date should be equal to the bond's

From page 9-3 of the VLN, what are the cash flows from a bond that must be present valued back to today? Group of answer choices A. The face amount only B. The interest payments only C. The issue price only D. The face amount and interest payments

Which of the following about bonds is false? OA. Higher bond rating indicates higher probability of default. OB. An indenture is the legal agreement between the firm issuing the bond and the trustee who represents the bondholders. OC.Call protection period where the firm cannot call the bond for a specified period of time. OD.A mortgage bond is secured by a lien on real property. OE. Both A and B.

How does one determine the required rate of return of a bond, the cash flows of a bond and the value of a bond?  How do you determine if a bond is a good investment? Are long-term bonds riskier than short-term bonds? Explain and Discuss.

1. Types of bonds Fixed-income securities consist of debt instruments and preferred stock. Bonds are debt securities in which a borrower promises to pay a specified interest rate and principal at a future date.   A. Which of the following statements about Treasury bonds is the most accurate?   Treasury bonds have a very small amount of default risk, so they are not completely riskless.   Treasury bonds are completely riskless.   Treasury bonds are not completely riskless, since their prices will decline when interest rates rise.     B. Based on the information given in the following statement, answer the questions that follow:   In July 2009, Hungary successfully issued 1 billion euros in bonds. The transaction was managed by Citigroup.   Who is the issuer of the bonds?   The Hungarian government   Hungary Bank   Citigroup     C. What type of bonds are these?   Municipal bonds   Corporate bonds   Government bonds

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.