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Match Each of the Following Terms with the Appropriate Definitions

Question 193

Matching

Match each of the following terms with the appropriate definitions.

Premises:

Responses:

Bearer bonds

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

Unsecured bonds

An obligation requiring a series of periodic payments to the lender.

Market rate

Bonds that are backed by the issuer's credit standing.

Coupon bonds

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

Serial 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 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.

Effective interest method

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.

Term bonds

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

Installment note

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

Premises:

Bearer bonds

Unsecured bonds

Market rate

Coupon bonds

Serial bonds

Bond indenture

Effective interest method

Convertible bonds

Term bonds

Installment note

Responses:

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

An obligation requiring a series of periodic payments to the lender.

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.

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 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.

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

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

Correct Answer:

Premises:

Responses:

Bearer bonds

Unsecured bonds

Market rate

Coupon bonds

Serial bonds

Bond indenture

Effective interest method

Convertible bonds

Term bonds

Installment note