Identify each statement as true or false. If false, indicate how to correct the statement. (And you have forgotten to answer the right ans of false in the previous question) 6. Bonds that mature in installments are called term bonds.7. A conversion feature may be added to bonds to make them more attractive to bond buyers.8. The rate used to determine the amount of cash interest the borrower pays is called the statedfate.9. Bond prices are usually quoted as a percentage of the face value of the bond.10. The present value of a bond is the value at which it should sell in the marketplace.InstructionsIdențify each statement as true or false. If false, indicate how to correct the statement.

6: The type of bonds that matures in installments are referred to as serial bonds as term bond…

Answered: Instructions Identify each statement as…

Business

Accounting

Instructions Identify each statement as true or false. If false, indicate how to correct the statement.

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter11: Bond Pricing And Amortization (bonds)

Section: Chapter Questions

Problem 3R

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Question

Identify each statement as true or false. If false, indicate how to correct the statement.

(And you have forgotten to answer the right ans of false in the previous question)

6. Bonds that mature in installments are called term bonds.
7. A conversion feature may be added to bonds to make them more attractive to bond buyers.
8. The rate used to determine the amount of cash interest the borrower pays is called the stated
fate.
9. Bond prices are usually quoted as a percentage of the face value of the bond.
10. The present value of a bond is the value at which it should sell in the marketplace.
Instructions
Idențify each statement as true or false. If false, indicate how to correct the statement.

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1. To calculate a gain or loss on redemption of a bond, you compare a. The market interest rate to the contract rate b. The carrying value value of the bond to the proceeds received from the sale of the bond c. The income for the period d. The proceeds to the unamortized premium or discount 2. If the proceeds are greater than the carrying value, you will have a a. gain with a credit balance b. gain with a debit balance c. loss with a debit balance d. loss with a credit balance
interest payment for bonds is calculated using the face value of the bonds and the __________ A. market value B. market interest rate C. stated interest rate D. original cost
Given the information below, which bond(s) will be issued at a discount? Stated Rate of Return Market Rate of Return. Bond 1. O Bond 2. Bond 4. O Bonds 1 and 2. Bond 1 5% 7% Bond 2 7% 8% Bond 3 12% 12% Bond 4 10% 9%
From page 9-2 of the VLN, what is the first thing you want to identify when approaching a bond problem? Group of answer choices A. Annual bond or semiannual bond B. Whether the market rate is different from the stated rate. C. The cash flows provided by the bond. D. The company's debt to equity ratio.
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
When the bond interest rate > the market rate, the bonds are issued at a discount. Select one: O True O False
If bonds are redeemed on maturity date, any premium or discount a. Is carried forward and written off in the same manner as that used prior to the maturity date. b. Should be used to calculate the gain or loss resulting from the maturity of the bonds. c. Should be written off directly to a bond retirement account as the bond will be redeemed. d. Will be fully amortized as its amortization period is designed to coincide with the life of the bond issue.
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.
Serial bonds are a. Bonds backed by collateral.b. Bonds that mature in installments.c. Bonds the issuer can repurchase at a fixed price.d. Bonds issued below the face amount.
(i) Based on the details of the three bonds, analyse which bond will be priced at the biggest discount.(ii) If the interest rate were to increase, discuss which bond will be affected most.(iii) If the bond rating for Bond A is lowered to BBB, discuss what must happen to the yield to maturity.
If the market rate of interest is greater than the contractual rate of interest, bonds will sell a. at a discount b. only after the stated rate of interest is increased c. at a premium d. at face value
There are certain patterns we should expect to see on a bond amortization table. Complete the following statements regarding these patterns. Item Statements A. Assuming a term bond is issued at a premium, the cash interest payment calculated every period should: B. Assuming a term bond is issued at a premium, the interest expense amount calculated every period using the effective interest method should be C. Assuming a term bond is issued at a premium, the carrying value over time should be D. Assuming a term bond is issued at either a premium or a discount, the carrying value on the issuance date should be equal to the bond's