CHAPTER 7: DEBT MANAGEMENT

Loans are meant for borrowing money over a brief period, usually a few weeks to a few months. What type of loans are these?

• Long Term

• Short Term

You can use gadgets or jewels as collateral for the loan, and you receive your stuff back once you pay it back. What type of loans are these?

• Salary Loans

• Microloans from Microfinance Institutions

• Pawn Loans

• Personal loans

These are Related Controls in Convertible Debt EXCEPT:

• Verify the market value of equity on conversion dates when the market value method is used.

• Verify the market value of equity on debt retirement dates when offsetting equity entries are being reversed.

• Verify expense calculations associated with any sweetened conversion offers.

• Require written and approved justification for the interest rate used to value debt.

The following are the advantages of asset-based lending EXCEPT:

• Accessible Financing

• Flexible Use of Funds

• Cost and Fees

• Improved Liquidity

A bond that can be converted to stock using a predetermined conversion ratio.

• Collateral Trust Bond

• Convertible Bond

• Debenture

• Zero Coupon Bond

What is all about the way where lenders help distributors or retailers buy big things like kitchen appliances or cars?

• Lending money

• Loan

• Borrowing

• Floor Planning

All of these statements are true about how lease works except:

• The lessee pays a security deposit, and the lessor will return it at the end of the term if there are no damages or unpaid rent.

• The lessor is responsible for property maintenance, while the lessee keeps the property in good condition and reports any issues.

• The lessor moves in and pays rent on a regular schedule.

• The lessor and lessee negotiate and sign an agreement outlining the terms of the rental agreement.

A type of accounting for debt wherein the market interest rate varies somewhat from the stated interest rate on the bond, so investors pay a different price in order to achieve an effective interest rate matching the market rate.

• Effective Interest Method

• Extinguishment of Debt

• Bonds Sold at a Discount or Premium

• Convertible Debt

This involves a specific conversion price per share, which is typically set at a point that makes the transaction uneconomical unless the share price rises at some point in the future.

• Book Value Method

• Convertible Debt

• Scheduled Bond Retirement

• Convertible Debt-Subsequent Change in Offering to Induce Conversion

Interest Rate Calculations require written and approved justification for the interest rate used to value debt. (True/False)

• True

• False