n theory (disregarding any other marketplace variables), the proceeds from the sale of a bond will be equal to The face amount of the bond plus the present value of the interest payments made during the life of the bond. The sum of the face amount of the bond and the periodic interest payments The face amount of the bond The present value of the bond maturity value plus the present value of the interest payments to be made during the life of the bond.

n theory (disregarding any other marketplace variables), the proceeds from the sale of a bond will be equal to The face amount of the bond plus the present value of the interest payments made during the life of the bond. The sum of the face amount of the bond and the periodic interest payments The face amount of the bond The present value of the bond maturity value plus the present value of the interest payments to be made during the life of the bond.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Which of the following is true about a bondholder? At the beginning of the life of the bond, the firm will pay a price for a bond and will then receive coupon payments throughout the life of the bond and receive the return of the principal amount at maturity At the beginning of the life of the bond, the firm will receive a price for a bond and will then pay coupon payments throughout the life of the bond and pay the return the principal amount at maturity At the beginning of the life of the bond, the bondholder will pay a price for a bond and will then receive coupon payments throughout the life of the bond and receive the return of the principal amount at maturity At the beginning of the life of the bond, the bondholder will receive a price for a bond and will then pay coupon payments throughout the life of the bond and pay the return the principal amount at maturity
All of the following refer to the face rate of interest on a bond except: a. stated rate b. effective rate c. nominal rate d. coupon rate
In an interest swap contract, the exchange of cash flow calculated in each period is based upon the: a. notional principal. b. present value of notional principal. c. swap principal. d. face value of interest-bearing bond.
For a standard U.S. Treasury bond, when are the following characteristics of the bond determined? The amounts of any interest payments. The dates of any interest payments. The bond's market yield. The bond's market price. The amount that the Treasury returns to the bondholder, when the bond matures. The price that the bondholder pays to the Treasury to acquire the bond. The maturity date. 1. 2. Fixed before the bonds are sold and does not change. Fixed when the bonds are sold and does not change. 3. Fluctuates continually.
Enumerate the following; 32. Provides for recognition of an equal amount of premium or discount amortization each period. 33. Bonds that mature in one lump sum at a specified future date. 34. Bonds that provide for conversion into some other security at the option of the stockholder. 35. Bonds that mature in a series of installments at future dates. 36. The difference between the face value and the sales price when bonds are sold below their face value. 37. Bonds for which assets are pledged to guarantee repayment. 38. Obligations that are not expected to be paid in cash within one year or the normal operating cycle. 39. Bonds that do not bear interest but instead are sold at significant discounts providing the investor with a total interest payoff at maturity. 40. Costs incurred by the issuer for legal services, printing and engraving, taxes, and underwriting in connection with the sale of a…
When a company uses the the effective-interest method to amortize a bond discount amortization, the interest expense is equal to a) the market rate multiplied by the beginning-of-period carrying amount of the bonds. b) the market rate of interest multiplied by the face value of the bonds. c) the stated rate multiplied by the beginning-of-period carrying amount of the bonds. d) the stated (nominal) rate of interest multiplied by the face value of the bonds.
Determine how the duration of a bond be affected if the coupons were extended over additional time periods.
22.The market price of a bond issued at a discount is the present value of its principal amount at the market (effective) rate of interest a. minus the present value of all future interest payment at the market (effective) rate of interest. b. plus the present value of all future interest payments at the market (effective) rate of interest. c. plus the present value of all future interest payments at the rate of interest stated on the bond. d. minus the present value of all future interest payments at the rate of interest stated on the bond. For your answer, enter either a or b or c or d. Group of answer choices b a c d
Which of the following statements is true? Select one:a)Short-term bonds have greater interest rate risk than do long-term bonds.b)Interest rate risk is highest during periods of high interest rates.c)Long-term bonds have greater interest rate risk than do short-term bonds.d)All bonds have equal interest rate risk.
At a bond's maturity, the bond issuer pays the bondholder the par value of the bond. True or False True False
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Which of the following does not impact the calculation ofthe cash interest payments to be made to bondholders?a. Face value of the bond.b. Stated interest rate.c. Market interest rate.d. The length of time between payments.