2. Characteristics of bondsA. To be effective issuing and investing in bonds, knowledge of their terminology, characteristics, and features is essential.For example: •A bond’s is generally $1,000 and represents the amount borrowed from the bond’s first purchaser.•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 B. What is the maturity date of this bond? 7-15-2055 7-15-2005

A. Face value Face value is the amount at which bonds are recorded in the books of accounts.…

Answered: A. To be effective issuing and…

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter10: Long-term Liabilities

Section: Chapter Questions

Problem 10.1KTQ

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2. Characteristics of bonds

A. To be effective issuing and investing in bonds, knowledge of their terminology, characteristics, and features is essential.

For example:

•	A bond’s is generally $1,000 and represents the amount borrowed from the bond’s first purchaser.
•	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

B. What is the maturity date of this bond?

7-15-2055

7-15-2005

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