Matching
Match the items below by entering the appropriate code letter in the space provided.
Premises:
A debt security that is traded on organized exchanges
Produces a periodic interest expense equal to a constant percentage of the amortized cost of the bonds.
Bonds that have specific assets pledged as collateral
A contractual arrangement that transfers the risks and rewards of ownership to the lessee.
Occurs when the contractual rate of interest is greater than the market rate of interest.
Indicates the company's ability to meet interest payments as they come due.
Fixed debt payments resulting in an increasingly larger portion of each payment being credited toward principal and a smaller portion toward interest over time.
Used to determine the amount of interest the borrower pays and the investor receives.
Bonds that can be retired by the company before they mature
Unsecured bonds issued against the general credit of the borrower
Borrowing at one rate and investing at a different rate.
A contractual arrangement that gives the lessee temporary use of property where the risks and rewards of ownership are not transferred.
Occurs when the contractual rate of interest is less than the market rate of interest.
Responses:
Operating lease
Debenture bonds
Bonds
Effective-interest method of amortization
Blended Payments
Financial Leverage
Interest Coverage
Contractual rate
Discount on bonds payable
Premium on bonds payable
Secured bonds
Redeemable bonds
Capital lease
Correct Answer:
Premises:
Responses:
A debt security that is traded on organized exchanges
Produces a periodic interest expense equal to a constant percentage of the amortized cost of the bonds.
Bonds that have specific assets pledged as collateral
A contractual arrangement that transfers the risks and rewards of ownership to the lessee.
Occurs when the contractual rate of interest is greater than the market rate of interest.
Indicates the company's ability to meet interest payments as they come due.
Fixed debt payments resulting in an increasingly larger portion of each payment being credited toward principal and a smaller portion toward interest over time.
Used to determine the amount of interest the borrower pays and the investor receives.
Bonds that can be retired by the company before they mature
Unsecured bonds issued against the general credit of the borrower
Borrowing at one rate and investing at a different rate.
A contractual arrangement that gives the lessee temporary use of property where the risks and rewards of ownership are not transferred.
Occurs when the contractual rate of interest is less than the market rate of interest.
Premises:
A debt security that is traded on organized exchanges
Produces a periodic interest expense equal to a constant percentage of the amortized cost of the bonds.
Bonds that have specific assets pledged as collateral
A contractual arrangement that transfers the risks and rewards of ownership to the lessee.
Occurs when the contractual rate of interest is greater than the market rate of interest.
Indicates the company's ability to meet interest payments as they come due.
Fixed debt payments resulting in an increasingly larger portion of each payment being credited toward principal and a smaller portion toward interest over time.
Used to determine the amount of interest the borrower pays and the investor receives.
Bonds that can be retired by the company before they mature
Unsecured bonds issued against the general credit of the borrower
Borrowing at one rate and investing at a different rate.
A contractual arrangement that gives the lessee temporary use of property where the risks and rewards of ownership are not transferred.
Occurs when the contractual rate of interest is less than the market rate of interest.
Responses:
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