Solved

Match Each of the Following Terms with the Appropriate Definitions

Question 187

Matching

Match each of the following terms with the appropriate definitions 1 through 10.

Premises:

Responses:

Bonds with interest coupons attached to their certificates; the bondholders detach the coupons when they mature and present them to a bank or broker for collection.

Coupon bonds

Bonds that are backed by the issuer's credit standing.

Installment note

The interest rate that borrowers are willing to pay and that lenders are willing to accept for a particular bond at its risk level.

Bond indenture

Bonds that can be exchanged by the bondholders for a fixed number shares of the issuing corporation's common stock.

Effective interest method

An obligation requiring a series of periodic payments to the lender.

Market rate

Bonds that are scheduled for payment on one specified date.

Bearer bonds

The contract between the bond issuer and the bondholders; it identifies the rights and obligations of the parties.

Term bonds

Bonds that are made payable to whoever holds them; also called unregistered bonds.

Convertible bonds

An accounting method that allocates interest expense over the bonds' life in a way that yields a constant rate of interest.

Serial bonds

Bonds that mature at more than one date and are usually paid over a number of periods.

Unsecured bonds

Premises:

Bonds with interest coupons attached to their certificates; the bondholders detach the coupons when they mature and present them to a bank or broker for collection.

Bonds that are backed by the issuer's credit standing.

The interest rate that borrowers are willing to pay and that lenders are willing to accept for a particular bond at its risk level.

Bonds that can be exchanged by the bondholders for a fixed number shares of the issuing corporation's common stock.

An obligation requiring a series of periodic payments to the lender.

Bonds that are scheduled for payment on one specified date.

The contract between the bond issuer and the bondholders; it identifies the rights and obligations of the parties.

Bonds that are made payable to whoever holds them; also called unregistered bonds.

An accounting method that allocates interest expense over the bonds' life in a way that yields a constant rate of interest.

Bonds that mature at more than one date and are usually paid over a number of periods.

Responses:

Coupon bonds

Installment note

Bond indenture

Effective interest method

Market rate

Bearer bonds

Term bonds

Convertible bonds

Serial bonds

Unsecured bonds

Correct Answer:

Premises:

Responses:

Bonds with interest coupons attached to their certificates; the bondholders detach the coupons when they mature and present them to a bank or broker for collection.

Bonds that are backed by the issuer's credit standing.

The interest rate that borrowers are willing to pay and that lenders are willing to accept for a particular bond at its risk level.

Bonds that can be exchanged by the bondholders for a fixed number shares of the issuing corporation's common stock.

An obligation requiring a series of periodic payments to the lender.

Bonds that are scheduled for payment on one specified date.

The contract between the bond issuer and the bondholders; it identifies the rights and obligations of the parties.

Bonds that are made payable to whoever holds them; also called unregistered bonds.

An accounting method that allocates interest expense over the bonds' life in a way that yields a constant rate of interest.

Bonds that mature at more than one date and are usually paid over a number of periods.