Which of the following statements is true if a bond is issued for an amount higher than face value? The bond's stated interest rate is less than the prevailing market interest rate at time of sale. The bond's stated interest rate is the same as the prevailing market interest rate at time of sale. The bond's stated interest rate is more than the prevailing market interest rate at time of sale. The bond is not secured by specific assets of the issuer.

Which of the following statements is true if a bond is issued for an amount higher than face value? The bond's stated interest rate is less than the prevailing market interest rate at time of sale. The bond's stated interest rate is the same as the prevailing market interest rate at time of sale. The bond's stated interest rate is more than the prevailing market interest rate at time of sale. The bond is not secured by specific assets of the issuer.

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter22: Corporations: Bonds

Section: Chapter Questions

Problem 10RQ: When bonds are redeemed before maturity, how is the gain or loss on redemption determined? Why does...

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What accounts are affected when bonds are issued at face value?
Which of the following statements relating to bonds is incorrect? A. A bond’s face value is the amount the issuer must pay to the bondholder at maturity. B. The owner of a registered bond is the person to whom interest payments are mailed. C. A bond will typically sell at a discount when its nominal rate is less than the current market rate of interest. D. A bond is a debt instrument giving the issuer flexibility as to maturity date.
Which of the following is true for bonds issued at a discount? a. The stated interest rate is greater than the market interest rate.b. The market interest rate is greater than the stated interest rate.c. The stated interest rate and the market interest rate are equal.d. The stated interest rate and the market interest rate are unrelated.
Which of the following is correct? a. The terms, “yield rate”, “ stated rate”, and “market rate” are generally interchangeable when referring to interest on bonds. b. The yield or effective interest rate on a bond is equal to the stated rate if the bond premium or discount is amortized by using the straight-line method. c. Interest revenue and expense related to bonds are always computed using the stated rate of interest. d. If a bond is sold at its face amount, the stated and effective interest rates are the same.
If bonds are issued at a discount, it means that the a. bondholder will receive effectively less interest than the contractual rate of interest b. market interest rate is lower than the contractual interest rate c. financial strength of the issuer is suspect d. market interest rate is higher than the contractual interest rate
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.
What effect does collateral have on the interest rate paid on a bond? Subordination also has an effect on the interest rate on a bond. What else may alter a bond's interest rate?
The market rate of interest for a bond issue that sells for more than its face value is a. Equal to the rate stated on the bond. b. Higher than the rate stated on the bond. c. Not dependent on the rate of the bond. d. Lower than the rate stated on the bond.
Is it true that on the date of maturity, a bond does not carry any interest rate risk?
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