
Concept Introduction:
Bonds:
Bonds are debt instruments issued by the borrower company to its lenders. Bonds are issued at a specified rate of interest and for a specified time period. The bondholders get a fixed rate of interest on the bonds and repayment of the bonds at the maturity date.
Contract rate:
Contract rate is the rate of interest prescribed in the bond indenture that shall be paid to the bondholder periodically.
Market rate:
Market rate is the rate of interest for the same type of bonds prevailing in the market. There may be a difference between the contract rate and market rate of interest on bonds. Due to the difference, the bonds are issued at premium or discount.
To indicate:
The method to calculate the price of the bond if Par value, contract rate and market rate is available.

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Chapter 14 Solutions
Loose Leaf For Fundamental Accounting Principles Format: Loose-leaf
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