Match the following bond and long-term liability related terms to the appropriate definition.
-The total of the present value of the cash flows produced by a bond.It is calculated as the present value of the annuity of interest payments plus the present value of the principal.
A)Long-term liability
B)Face value
C)Debenture bonds
D)Serial bonds
E)Callable bonds
F)Face rate of interest
G)Market rate of interest
H)Bond issue price
I)Premium
J)Discount
K)Effective interest method of amortization
L)Carrying value
M)Gain or loss on redemption

Question

Quizplus · Accepted Answer

The bond issue price is determined by calculating the total present value of all cash flows from the bond, including both the periodic interest payments and the principal repayment at maturity. This involves discounting these future cash flows back to their present value using the market rate of interest.

Match the Following Bond and Long-Term Liability Related Terms to the Appropriate