Matching
Match each of the following terms with the appropriate definitions.
Premises:
The contract between the bond issuer and the bondholders; it identifies the rights and obligations of the parties.
Bonds that are scheduled for payment on one specified date.
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 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 made payable to whoever holds them; also called unregistered bonds.
An obligation requiring a series of periodic payments to the lender.
Bonds that are backed by the issuer's credit standing.
Bonds that mature at more than one date and are usually paid over a number of periods.
An accounting method that allocates interest expense over the bonds' life in a way that yields a constant rate of interest.
Bonds that can be exchanged by the bondholders for a fixed number shares of the issuing corporation's common stock.
Responses:
Serial bonds
Installment note
Unsecured bonds
Market rate
Convertible bonds
Bearer bonds
Term bonds
Bond indenture
Coupon bonds
Effective interest rate method
Correct Answer:
Premises:
Responses:
The contract between the bond issuer and the bondholders; it identifies the rights and obligations of the parties.
Bonds that are scheduled for payment on one specified date.
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 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 made payable to whoever holds them; also called unregistered bonds.
An obligation requiring a series of periodic payments to the lender.
Bonds that are backed by the issuer's credit standing.
Bonds that mature at more than one date and are usually paid over a number of periods.
An accounting method that allocates interest expense over the bonds' life in a way that yields a constant rate of interest.
Bonds that can be exchanged by the bondholders for a fixed number shares of the issuing corporation's common stock.
Premises:
The contract between the bond issuer and the bondholders; it identifies the rights and obligations of the parties.
Bonds that are scheduled for payment on one specified date.
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 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 made payable to whoever holds them; also called unregistered bonds.
An obligation requiring a series of periodic payments to the lender.
Bonds that are backed by the issuer's credit standing.
Bonds that mature at more than one date and are usually paid over a number of periods.
An accounting method that allocates interest expense over the bonds' life in a way that yields a constant rate of interest.
Bonds that can be exchanged by the bondholders for a fixed number shares of the issuing corporation's common stock.
Responses:
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