A discount on bonds payable: Multiple Choice   A) Occurs when a company issues bonds with a contract rate more than the market rate.   B) Is not allowed in many states to protect creditors.   C) Occurs when a company issues bonds with a contract rate less than the market rate.   D) Decreases the total bond interest expense.   E) Increases the Bond Payable account.

Q: ight-line method of amortization is used, the amount of unamortized premium on bonds payable will…

A: Amortization is the method of reducing or accounting for, an amount over a period of time. Over the…

Q: Why might a company choose to raise money through bonds, rather than take out a note payable or…

A: Bonds are the long-term liability of the company where the company raises the money in lieu of…

Q: Identify the following as either an advantage (A) or a disadvantage (D) of bond financing for a…

A: Corporate Bond: Bonds issued by companies, whether they be public or private, are considered to be…

Q: Why would a company wish to reduce its bond indebtedness before its bonds reach maturity? Indicate…

A:

Q: When bonds are issued at a discount, what happens to the carrying value and interest expense over…

A: Bonds can be issued at both at a premium or at a discount. When issue price is lower than face value…

Q: Revenue bonds, compared with general obligation bonds, generally A.) Are paid out of property or…

A: Revenue Bonds: Revenue bonds are a type of municipal bond issued by a government agency or entity to…

Q: Identify the incorrect statement. A. Banks that issue bonds increase their equity. B. Companies that…

A: Bonds are debt instruments that entities use to raise capital. When an entity (whether a bank,…

Q: The effective rate of interest on bonds is the interest rate specified on the bond certificate. is…

A: Introduction: A bond is a form of debt that the bond issuer owes to the bondholders. The common…

Q: None

A: Step 1: Introduction to Issuance of BondsBonds are issued when the issuer needs more funds or…

Q: Higher interest rates on treasury bonds Identify whether it: (Select one choice per number) (A)…

A: Inflation is defined as a quantitative estimate of the rate at which a currency's buying power is…

Q: Which of the following describes a bond's credit risk? O The probability that financially sound…

A: The credit risk of a bond refers to the likelihood that the issuer of the bond will default on its…

Q: Identify the following as either an advantage or a disadvantage of bond financing for a company. a.…

A: Bonds are debt instruments issued by companies to raise funds.The company that issues the bonds…

Q: When a company exercises its call provision on bonds, the company pays the book value of the bonds…

A: Call provision on the bond is the option held by the issuer for redeeming back the bonds if in case…

Q: bond issuance costs are incurred

A: First option is wrong because one among the options is correct. Second option is wrong because…

Q: True or False: Bond issuers agree to pay interest to those who purchase bonds and hold them to…

A: Bonds are the long-term debt instruments used by governments and corporations to raise loan.

Q: Which type of bonds offers the holder no security in event of default by the issuer?

A: A company  can raise funds through bonds

Q: Bonds which are collateralized by specific assets in the event the borrowing company defaults on…

A: Bonds are a form of liability for the business. These can be issued for short term or long term.…

Q: Why are bonds sometimes issued at a discount?

A: The correct answer is: (A) The stated rate of interest is lower than the rate being paid on…

Q: Which of the following about bonds is false? OA Higher bond rating indicates higher probability of…

A: A bond is a debt instrument used by companies to raise capital from their investors. The investor…

Q: Which of the following lowers the required interest rate that firms have to pay on their bonds?…

A: Companies tend to pay larger interest rates as the risk is raised to the bond investor since the…

Q: When selling bonds at a premium, the premium received effectively a.does not affect the cost of…

A: Premium means selling of bond at price higher than face value.

Q: no Have All Questions been Answered? There are Three Parts to this problem (A, B, and C). Part A.…

A: Details are provided below.Explanation:The market rate of interest is greater than the stated rate…

Q: Firms generally decide to call their bonds when interest rates   rise drop remain the same there is…

A: When the bond interest rate rises, the firms are at an advantage as they have been able to secure…

Q: When the contract rate of a corporate bond is lower than the market rate, what happens to the face…

A: First, let's understand the terms. The contract rate (also known as the coupon rate) is the interest…

Q: As the bond discount is amortized, the carrying value of the bonds will increase. True False

A: “Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: Bonds are a common long-term debt instrument. They are interesting because they are issued with a…

A: 1. If the bond is selling at a premium is that the value of a bond is more than its face value.…

Q: When the total cost of borrowing is less than the bond interest paid, Select answer from the options…

A: A bond may be issued at face value, at a discount, or at a premium. The bond is issued at face value…

Q: he journal entry a company makes for the is a. debit Cash and Discount on Bonds Payable, cred Ob.…

A: When the contract rate is less than the Market rate , the bonds are issued at discount.

Q: Analyze the truth of this statement:  Unlike bonds each installment note payment includes payment of…

A: Not payable  can be short term  Not payable or a longterm  Not payable

Q: Which of the following is a disadvantage to a corporation issuing bonds? Group of answer choices…

A: Disadvantages of issuing a bonds; (1) Since bonds are an increase in debt, they might adversely…

Swaps

A swap is a derivative contract in which two parties are agreed to exchange their cash flows from two different financial instruments for a defined period. In swap contracts, cash flows from one financial instrument are fixed and cash flow from other financial instruments is variable based on the interest rate, exchange rate, and commodity price. Swap contracts are transacted in an over-the-counter system. Swap contracts are utilized to hedge risk and mitigate loss.