Solved

Match Each Definition with Its Term

Question 191

Matching

Match each definition with its term

Premises:

Responses:

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

Installment note

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

Bearer bonds

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

Unsecured bonds

An obligation requiring a series of periodic payments to the lender

Term bonds

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 are backed by the issuer's credit standing

Effective interest rate method

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

Coupon bonds

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

Market rate

Bonds that are scheduled for payment on one specified date

Convertible bonds

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

Serial bonds

Premises:

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

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

An obligation requiring a series of periodic payments to the lender

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 are backed by the issuer's credit standing

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

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 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

Responses:

Installment note

Bearer bonds

Unsecured bonds

Term bonds

Bond indenture

Effective interest rate method

Coupon bonds

Market rate

Convertible bonds

Serial bonds

Correct Answer:

Premises:

Responses:

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

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

An obligation requiring a series of periodic payments to the lender

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 are backed by the issuer's credit standing

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

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 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