Solved

Match Each of the Following Items with the Appropriate Definition

Question 302

Matching

Match each of the following items with the appropriate definition below.

Premises:
the concept of using borrowed funds to increase earnings
bonds that can be converted into common stock at the option of the investor
the face value of a bond times the stated interest rate of the bond
bonds that have a feature that allows the issuing company to buy back the bonds before maturity
a ratio that compares the value of the creditors' claims with the value of the owners' claims
occurs when a bond is sold for more than the face value of the bond
occurs when a bond is sold for less than the face value of the bond
the value of a bond,minus its unamortized discount or plus its unamortized premium
a bond that pays no interest during its life
Responses:
callable bonds
financial leverage
zero-interest bonds
debt-to-equity ratio
convertible bonds
carrying value
bond discount
bond interest payment
bond premium

Correct Answer:

the concept of using borrowed funds to increase earnings
bonds that can be converted into common stock at the option of the investor
the face value of a bond times the stated interest rate of the bond
bonds that have a feature that allows the issuing company to buy back the bonds before maturity
a ratio that compares the value of the creditors' claims with the value of the owners' claims
occurs when a bond is sold for more than the face value of the bond
occurs when a bond is sold for less than the face value of the bond
the value of a bond,minus its unamortized discount or plus its unamortized premium
a bond that pays no interest during its life
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