A bond has a nominal interest rate of treasury bond rate plus 5%. This same bond requires the entity to have its investment property as collateral. This would indicate that it is a/an * A. Mortgage bond with a variable rate B. Equipment trust bond with a variable rate C. Mortgage bond with a fix rate D. Equipment trust bond with a fix rate

A bond has a nominal interest rate of treasury bond rate plus 5%. This same bond requires the entity to have its investment property as collateral. This would indicate that it is a/an * A. Mortgage bond with a variable rate B. Equipment trust bond with a variable rate C. Mortgage bond with a fix rate D. Equipment trust bond with a fix rate

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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Serial bonds are a. Bonds backed by collateral.b. Bonds that mature in installments.c. Bonds the issuer can repurchase at a fixed price.d. Bonds issued below the face amount.
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Bonds which require the face value (principal) amount to be paid back in installments over the life of the bond are called: Select one: a. serial bonds. b. convertible bonds. c. callable bonds. d. unsecured bonds. e. term bonds. f. secured bonds.
Bond A is a municipal bond and Bond B is a corporate bond. Which bond should have the lower yield to maturity? Select one: a. B b. A c. A=B
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
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If bonds are redeemed on maturity date, any premium or discount a. Is carried forward and written off in the same manner as that used prior to the maturity date. b. Should be used to calculate the gain or loss resulting from the maturity of the bonds. c. Should be written off directly to a bond retirement account as the bond will be redeemed. d. Will be fully amortized as its amortization period is designed to coincide with the life of the bond issue.
Which type of bond- a mortgage bond, a debenture, or a subordinated debenture- generally has the a. Highest cost to the bond issuer? B. least risk to the bond holder? c. highest yield to the bond holder?
Bonds which are collateralized by specific assets in the event the borrowing company defaults on bond payments are called: Select one: a. serial bonds. b. callable bonds. c. unsecured bonds. d. secured bonds. e. convertible bonds.
PROBLEM: 1. Match the following bond classifications with the appropriate characteristic by entering the appropriate letter in the space provided. Zero-coupon bonds f. Callable bonds а. Debenture bonds е. Mortgage bonds Registered bonds d. b. с. Convertible bonds g. h. Coupon bonds Serial bonds 1. Portions of the bond mature in periodic installments. 2. Unregistered bonds. 3. Bonds that are secured by a lien against specific assets. 4. Bonds that can be exchanged for a predetermined number of shares of stock. 5. Bonds whose marketability is based on the general credit rating of the issuing company. 6. Bonds whose interest is paid to the individuals listed in the corporate records as owners of the bonds. 7. Bonds that the company has the right to retire before their maturity date. 8. Bonds on which no interest is paid until the maturity date.
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