Please help me answer questions 7-1 and 7-2 Review QuestionsAll Review Questions are available in MyLab Finance.7-1. Distinguish between debentures and mortgage bonds.7-2. Define (a) Eurobonds, (b) zero coupon bonds, and (c) junk bonds.

7-1. Debentures and mortgage bonds are both debt instruments but they largely vary in asset and…

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EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 16QTD

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Part I(1) What does it mean to amortize a bond premium or discount? Why is it necessary? (2) What are the two bond amortization methods mentioned in the book and how are they different? Part IIPlease select ONE of the problems below and record the proper journal entry for recording the issuance of the bond. Hint: You will need to refer to the Present Value Tables.pdf Download Present Value Tables.pdf. Please indicate which scenario you are answering. (a) On January 1, a corporation issued a $1 million, five-year, 10 percent bond that pays interest semiannually. The market interest rate on January 1 was 12 percent. (b) On January 1, a corporation issued a $1 million, five-year, 11 percent bond that pays interest semiannually. The market interest rate on January 1 was 10 percent. Part IIIPlease describe what is meant by “Times Interest Earned.” How is it calculated? Suppose you calculated this ratio for a company for two consecutive years and the results were the following: Year…
From page 9-3 of the VLN, when determining the issue price of a bond, which interest rate would you use? Group of answer choices A. Stated rate B. Market rate C. Nominal rate D. Compound rate
1. Go to finance yahoo and search for bonds. Address the following about the bond that you select and bonds in general: a) Describe the different types of bonds.b) Describe the difference between stocks and bonds.c) Select a specific bond to focus on. Describe the bond and why you selected it.d) Explain the security of the bond, that is, whether the bond has collateral.e) Describe how the seniority of the bond is calculated.f) Describe the presence of a sinking fund. Does the bond you selected to fit into this category? Explain. If it does not, find one that does and describe how this impacts the bond.g) Review a bond with a call provision and explain the specified call dates and call prices.h) Review a bond with a deferred call accompanying the above call provision and explain what this means.i) What are positive covenants.? Discuss several possible positive covenants the bond company might consider.j) What are negative covenants? Also, discuss several possible negative covenants the…
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6. When is interest expense more than interest paid? a. when bonds are sold at a premiumb. when bonds are sold at parc. when bonds are sold at a discountd. when bonds are sold at a yield
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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.
Terms related to long-term debt. Place the letter of the best matching phrase before each word. 1. Indenture 6. Times Interest Earned Ratio Refunding Bonds Issued at Par 2. 7. Mortgage 3. 8. Premium on Bonds Carrying Value Nominal Rate 4. 9. Reacquisition Price 5. 10. Market Rate Requires that bond discount be reported in the balance sheet as a direct deduction from the face of the bond. b. a. Rate set by party issuing the bonds which appears on the bond instrument. The interest paid each period is the effective interest at date of issuance. d. C. Rate of interest actually earned by the bondholders. Results when bonds are sold below par. f. e. Results when bonds are sold above par. The replacement of an existing bond issuance with a new one. g. h. Price paid by issuing corporation for its own bonds. Book value of bonds at any given date. Ratio of current assets to current liabilities. i. k. The bond contract or agreement. 1. Indicates the company's ability to meet interest payments as…
Question 47: Match each financial function to its best description. PMT PV Table FV Calculates the value of a bond at a later date Calculates the required payment for a bond Calculates the current value of a bond
Serial bonds are: Select one: a. Bonds issued below their face value b. Bonds that mature in installments c. Bonds issued by Quaker Oats d. Bonds backed by collateral e. Bonds with greater risk
Which of the following would be included in the journal entry to show the conversion of bonds payable with additional consideration (a 'sweetener ' to encourage bondholders to sell their bond back )? (NIE 13) A debit to conversion expense debit to common stock A debit to cash A debit to bond discount
Zero coupon bonds are an example of ___________. a. convertible bonds b. extendible notes c. original issue deep discount bonds d. floating rate notes

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Review Questions All Review Questions are available in MyLab Finance. 7-1. Distinguish between debentures and mortgage bonds. 7-2. Define (a) Eurobonds, (b) zero coupon bonds, and (c) junk bonds.