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Match Each of the Following Terms with the Appropriate Definitions

Question 186

Matching

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

Premises:

Responses:

Bonds that have specific assets of the issuer pledged as collateral.

Secured bonds

The net amount at which bonds are reported on the balance sheet.

Premium on bonds.

Bonds that give the issuer an option of retiring them at a stated amount before the date of maturity.

Annuity

The difference between the par value of a bond and its higher issue price or carrying value.

Bond

The ratio of total liabilities to total equity.

Bond indenture

A series of equal payments at equal intervals.

Contract rate

The interest rate specified in the bond indenture.

Carrying value

A written promise to pay an amount identified as the par value along with interest at a stated rate.

Callable bonds

The contract between the bond issuer and the bondholder(s); it identifies the rights and obligations of the parties.

Debt to equity ratio

Bonds that require the issuer to create a fund of assets at specified amounts and dates to repay the bonds at maturity.

Sinking fund bonds

Premises:

Bonds that have specific assets of the issuer pledged as collateral.

The net amount at which bonds are reported on the balance sheet.

Bonds that give the issuer an option of retiring them at a stated amount before the date of maturity.

The difference between the par value of a bond and its higher issue price or carrying value.

The ratio of total liabilities to total equity.

A series of equal payments at equal intervals.

The interest rate specified in the bond indenture.

A written promise to pay an amount identified as the par value along with interest at a stated rate.

The contract between the bond issuer and the bondholder(s); it identifies the rights and obligations of the parties.

Bonds that require the issuer to create a fund of assets at specified amounts and dates to repay the bonds at maturity.

Responses:

Secured bonds

Premium on bonds.

Annuity

Bond

Bond indenture

Contract rate

Carrying value

Callable bonds

Debt to equity ratio

Sinking fund bonds

Correct Answer:

Premises:

Responses:

Bonds that have specific assets of the issuer pledged as collateral.

The net amount at which bonds are reported on the balance sheet.

Bonds that give the issuer an option of retiring them at a stated amount before the date of maturity.

The difference between the par value of a bond and its higher issue price or carrying value.

The ratio of total liabilities to total equity.

A series of equal payments at equal intervals.

The interest rate specified in the bond indenture.

A written promise to pay an amount identified as the par value along with interest at a stated rate.

The contract between the bond issuer and the bondholder(s); it identifies the rights and obligations of the parties.

Bonds that require the issuer to create a fund of assets at specified amounts and dates to repay the bonds at maturity.