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Match Each of the Following Terms with the Appropriate Definitions

Question 189

Matching

Match each of the following terms with the appropriate definitions 1 through 10.

Premises:

Responses:

Unsecured bonds

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

Serial bonds

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

Bearer bonds

Bonds that are scheduled for payment on one specified date

Installment note

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

Term bonds

Bonds that are backed by the issuer's credit standing

Effective interest rate method

An obligation requiring a series of periodic payments to the lender

Bond indenture

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

Convertible 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

Coupon bonds

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

Market rate

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

Premises:

Unsecured bonds

Serial bonds

Bearer bonds

Installment note

Term bonds

Effective interest rate method

Bond indenture

Convertible bonds

Coupon bonds

Market rate

Responses:

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

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

Bonds that are scheduled for payment on one specified date

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 backed by the issuer's credit standing

An obligation requiring a series of periodic payments to the lender

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

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

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

Correct Answer:

Premises:

Responses:

Unsecured bonds

Serial bonds

Bearer bonds

Installment note

Term bonds

Effective interest rate method

Bond indenture

Convertible bonds

Coupon bonds

Market rate