Question

1,The carrying value of a bond issued at a discount is its face value less the unamortized portion of the discount?True or false?

2. What happens to the carrying value of bonds issued at a premium over the life of the bond issued ?

a.decreases

b.decreases

c.stays the same

3.the issuance price on bonds sold at par value is

a. less than the face value

b. equal to the face value

c. greater than the face value

d. not determinable

4.WhIch of the following are alternative names for the effective rate (of interest) SELECT ALL THAT APPLYY

a. yield

b. real rate

c. market rate

5. The amount of periodic interest expense for a particular bond issue is a function of

a. the coupon rate

b. the effective rate.

c.both the coupon rate and effective rate

d. neither the coupon rate nor the effective rate

6. the interest rate on a convertible debt is usually _______ the interest rate on a nonconvertible debt

d. stated rate

e. coupon rate

f. nominal rate

7. Which of the following are altermatives names for the coupon rate of interest? SELECT ALL THAT APPLY

a. nominal rate

b. market rate

c. stated rate

d. face rate

e. contract rate

f. yield

8.The amount of periodic interest paid on a bond issue is determined by:

a.the coupon rate

b. the market rate

c. both the coupon rate and the market rate

d. neither the coupon rate nor the market rate

9. Which of the following is NOT true when the effective rate of interest is less than the stated rate of interest?

a. the cash interest paid will be less than the interest expense

b. the debt will be issued at a premium

c. the cash proceeds of the note will be greater than the face value

d. the cash paid at the maturity date will be equal to the face value

10. A long term debt instrument for which real estate is pledged as collateral is known as an ______ _

Answer 1

Question 1

Correct answer----------True.

The carrying value of a bond issued at discount is always less than its face value. Discount on bonds is the amount less received from borrowers.

Question 2

Correct answer----------(a) decreases.

The carrying value of bond issued at premium is more than its face value and it decreases till the carrying value becomes equal to face value. This happens at maturity only.

Question 3

Correct answer----------(b) equal to the face value.

When bond is issued at par then there is no premium or discount hence the face value is equal to carrying value.

Question 4

Correct answer----------(a) Yeild and (c) Market rate.

Question 5

Correct answer----------Effective rate.

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