Intro to Bonds

Front

Bonds are . . .

Back

notes payable

Front

A bond with an interest rate higher than the market interest rate will be price ______ than its face value.

Back

higher

Front

A 5-year 100,000 bond with a 10% interest rate will pay how much interest in total?

Back

10,000

Front

How much will a 5-year 100,000 bond with a 10% interest rate pay each year?

Back

2,000

Front

Convertible bonds are those that can be converted (changed) into ________.

Back

stock

Front

True or False: Universities can issue bonds.

Back

True

Front

A mortgage bond is an example of a . . .

Back

secured bond

Front

You have a 5-year 4% corporate bond with a face value of $1,000. At the end of the five year period, what amount will the corporation pay you? Do not include interest.

Back

$1,000

Front

You want to invest money so that in 5 years you have $50,000. You know that you can earn 7% per year on an investment opportunity. Which number do you need to solve for to find the amount of money that you need to invest today?

Back

Present Value

Front

When a corporation sells a bond, which account does it need to debit?

Back

cash