### Times Interest Earned**Multiple Choice Question:****Times interest earned is:**- **A)** The number of times the interest on a bond issue is covered by operating profit- **B)** The number of times the dividends are covered by net income- **C)** The number of times the interest on a bond issue is covered by net income- **D)** The number of times the interest on a bond issue is covered by retained earnings### Explanation:The "Times Interest Earned" (TIE) ratio is a measure used to determine how easily a company can pay interest on outstanding debt. It is often calculated by dividing operating profit (also known as earnings before interest and taxes - EBIT) by the interest expense. This ratio indicates the company's financial flexibility and ability to meet financial obligations.

Times interest earned is A) The number of times the interest on a bond issue is covered by operating profit B) The number of times the dividends are covered by net income C) The number of times the interest on a bond issue is covered by net income D) The number of times the interest on a bond issue is covered by retained earnings

Times interest earned is A) The number of times the interest on a bond issue is covered by operating profit B) The number of times the dividends are covered by net income C) The number of times the interest on a bond issue is covered by net income D) The number of times the interest on a bond issue is covered by retained earnings

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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When determining the amount of interest to be paid on a bond, which of the following information is not necessary? a. The length of the interest period, annually or semiannually b. The face rate of interest on the bonds c. The face amount of the bonds d. The selling price of the bonds
Bonds that are issued on the general creditworthiness of the company are: Bonds that are issued on the general creditworthiness of the company are: 1. callable bonds 2. convertible bonds 3. secured bonds 4. debenture or unsecured bonds
Describe the accounting for bonds payable, including bonds issued at face amount, bonds issued at a discount , nd bonds issued at a premium ?
A $2,600 credit balance in the Premium on Bonds Payable account represents which of the following? Select one: a. An overpayment for a bond purchase b. An underpayment for a bond purchase c. The current amount of amortization expense d. The unamortized amount of premium earned on a bond issue
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.
12. The rate of interest actually earned by bondholders is called the a. stated rate. b. coupon rate. c. bond rate. d. effective rate.
18. Which of the following statements are true?Statement I. An interest rate reflects the rate of return that a creditor receives when lending money, or the rate that a borrower pays when borrowing money. Interest rates change over time, so does the rate earned by creditors who provide loans or the rate paid by borrowers who obtain loans. Statement II. Interest rate movements have a direct influence on the market values of debt securities, such as money market securities, bonds, and mortgages. Statement III. Interest rate movements have an indirect influence on equity security values because they can affect the return by investors who invest in equity securities. Statement IV. Since interest rates have an influence on securities, participants in financial markets attempt to anticipate interest rate movements when restructuring their investment or loan positions. a. I,II,III b. I,II,IV c. I,III,IV d. I,II,III,IV
which of the follwoing are financial claims? bonds pension obligations equity both bonds and equity
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
Yields on debt securities are affected by credit risk, tax status, liquidity and term to maturity. Discuss the effect of these factors on the yield of debt securities.
The selling price for bonds is computed by calculating the present value of future cash receipts by using the contract rate of interest. True or False

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