FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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A corporate bond, Aaa credit, with a par value of $1000 is quoted at 94 3/8. What is the cost of the bond?
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- Calculate the value of each bond and discuss whether it sells at par, discount, or premium. (Annual interest rate) O A. Bond Bond Value A B C O B. Bond A B C O C. Bond A B с O D. Bond A B C $1,149.39 Discount $1,000.00 Par $85.60 Premium Bond Value Sells at par/discount/premium Bond Value $1,149.39 Premium $1,000.00 Par $85.60 Discount Sells at par/discount/premium Bond Value Sells at par/discount/premium $1,149.39 Premium $1,000.00 Par $85.60 Premium Sells at par/discount/premium $1,049.39 Premium $1,100.00 Premium $85.60 Discount Bond Par value Coupon interest Years to rate maturity JA B IC $1000 14% $1000 18% $100 10% 120 16 18 Required return 12% 8% 13%arrow_forwardWhat is the typical relationship among interest rates onthree-month Treasury bills, long-term Treasury bonds,and Baa corporate bonds?arrow_forwardFor a standard corporate bond, when are the following characteristics of the bond determined? ······ The amount that the issuer returns to the bondholder, when the bond matures. The maturity date. The bond's market yield. The bond's market price. The price that the bondholder pays to the issuer to acquire the bond. The amounts of any interest payments. The bond's coupon rate. The dates of any interest payments. 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.arrow_forward
- Consider the following three bond quotes: a Treasury note quoted at 98.84, a corporate bond quoted at 103.10, and a municipal bond quoted at 101.75. If the Treasury and corporate bonds have a par value of $ 1,000 and the municipal bond has a par value of $5,000, what are the prices of these three bonds in dollars?arrow_forward5. Compute the price of $94,580,761 received for the bonds by using the tables shown in Present Value Tables. (Round to the nearest dollar.) Present value of the face amount Present value of the semiannual interest payments Price received for the bondsarrow_forwardBonds with a face value of $336000 and a quoted price of 98.5 have a selling price of $329297. $329448. $330960. $330120.arrow_forward
- Given the information below, which bond(s) will be issued at a premium? Bond 1 Bond 2 Bond 3 Bond 4 Stated Rate of Return 5% 10 % 15% 12% Market Rate of Return 5% 8% 12% 14% Bond 1. Bond 2. Bond 4. Bonds 2 and 3.arrow_forwardA. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? 24 B. Were they issued at a discount or a premium?arrow_forwardBonds with a face value of $504000 and a quoted price of 104.25 have a selling price of $525420. $524160. $524286. $506142.arrow_forward
- Please answer both. This is part A and Barrow_forwardIf you were to purchase a 12% bond when the market interest rate for such bonds was 11%, would you expect to pay more or less than the face amount for the bond? If you were to purchase a 12% bond when the market interest rate for such bonds was 13%, would you expect to pay more or less than the face amount for the bond? Explain your answers from above?arrow_forwardJohansen Company issued a bond at a discount. Which of the following shows how the issuance of the bonds affects the financial statements? Balance Sheet A. C. D. Assets = Liabilities + Multiple Choice O O OO Option A Option C Option B Option D Stockholders' Equity n/a n/a n/a Revenue n/a n/a n/a n/a Income Statement Expense + n/a + n/a = Net Income Statement of Cash Flows +OA +FA +FA +OA n/a n/aarrow_forward
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