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WorksheetsPOST TEST-TTM 11-longterm liab
Total questions: 12
Worksheet time: 14mins
Each of the following is correct regarding bonds except they are
a form of interest-bearing notes payable
attractive to many investors
issued by corporations and governmental agencies
sold in large denominations
Which of the following is not an advantage of issuing bonds instead of ordinary shares?
Shareholder control is not affected
Earnings per share may be lower
Income to shareholders may increase
Tax savings result
Bonds that are subject to retirement at a stated dollar amount prior to maturity at the option of the issuer are called
callable bonds
early retirement bonds
options
debentures
A bond secured by specific assets set aside to redeem the bonds is called a
convertible bond
sinking fund bond
mortgage bond
secured bond.
Companies with good credit ratings use ___________________ bonds extensively
callable bonds
convertible bonds
mortgage bonds
debenture bonds
Which of the following statements concerning bonds is not a true statement?
Bonds are generally sold through an investment company
The bond indenture is prepared after the bonds are printed
The bond indenture and bond certificate are separate documents
The trustee keeps records of each bondholder
A HK $600,000 bond was retired at 98 when the carrying value of the bond was HK $590,000. The entry to record the retirement would include a
gain on bond redemption of HK $10,000
loss on bond redemption of HK $10,000
loss on bond redemption of HK $2,000
gain on bond redemption of HK $2,000
A €1,000 face value bond with a quoted price of 98 is selling for
€1,000
€980
€908
€98
A bond with a face value of HK $200,000 and a quoted price of 102⅛ has a selling price of
HK $240,225
HK $204,025
HK $200,225
HK $204,250
The selling price of a €10,000, 5-year bond, will be less than €10,000 if the
contractual interest rate is less than the market interest rate
contractual interest rate is greater than the market interest rate
bond is convertible
contractual interest rate is equal to the market interest rate
The market interest rate is often called the
stated rate
effective rate
coupon rate
contractual rate
The total cost of borrowing is increased only if the
bonds were issued at a premium
bonds were issued at a discount
bonds were sold at face value
market interest rate is less than the contractual interest rate on that date
