Which of the following statements regarding bonds payable is true?
A)Generally, bonds are issued in denominations of $100.
B)When an issuing company's bonds are traded in the "secondary" market, the company will receive part of the proceeds when the bonds are sold from the first purchaser to the second purchaser.
C)A debenture bond is backed by specific assets of the issuing company.
D)The interest rate in the bond contract is called the stated rate.

Question

Quizplus · Accepted Answer

a. Generally, bonds are issued in denominations of $1000, not $100. This is a standard denomination for many corporate and government bonds.
b. When an issuing company's bonds are traded in the "secondary" market, the company does not receive any part of the proceeds when the bonds are sold from the first purchaser to the second purchaser. The transaction occurs between investors, and the issuing company is not involved in the transaction after the initial sale (primary market transaction).
c. A debenture bond is not backed by specific assets of the issuing company. Instead, debentures are unsecured bonds that rely on the general creditworthiness and reputation of the issuer.
d. The interest rate in the bond contract is indeed called the stated rate, coupon rate, or nominal rate. This is the rate at which the issuer agrees to pay interest to the bondholders, and it is typically fixed for the life of the bond.

Which of the Following Statements Regarding Bonds Payable Is True