WorksheetsQuiz on Non-Current Liabilities and Bonds
Total questions: 9
Worksheet time: 5mins
Which of the following is a major characteristic of bonds?
Issued to obtain short-term capital
Sold in large denominations
Attract few investors
Convertible into ordinary shares
What are secured bonds?
Convertible into ordinary shares at bondholder's option
Issued against general credit of borrower
Redeemable at a stated currency amount prior to maturity
Pledged with specific assets of issuer as collateral
When can bondholders convert their holdings into cash?
When the bonds are issued at a discount
When the market price is higher than the face value
When the market rate of interest is equal to the contractual rate
When the issuing company receives further money on the transaction
What is the market rate of interest?
The rate the issuing company will pay to the bondholder
The rate investors demand for loaning funds
The rate at which bonds are issued at face value
The rate at which bonds are redeemed by the issuing company
How are bonds issued at a premium accounted for?
Issued at a discount to the face value
Issued at an amount above the face value
Issued at an amount below the face value
Issued at an amount equal to the face value
What is the purpose of bond interest expense?
To record transfers of bonds among investors
To list the bond indenture
To calculate the amount of cash interest paid by the borrower
To determine the market rate of interest
Which statement about mortgage bonds is true?
They are convertible into ordinary shares at bondholder's option
They are an example of unsecured bonds
They are issued against general credit of borrower
They are secured bonds with specific assets pledged as collateral
What is the contractual interest rate?
The rate investors demand for loaning funds
The rate at which bonds are redeemed by the issuing company
The rate at which bonds are sold at face value
The rate the issuing company will pay to the bondholder
When are bonds issued at a discount?
When the bonds are sold at face value
When the market rate of interest is lower than the contractual rate
When the market rate of interest is higher than the contractual rate
When the contractual interest rate is equal to the market rate of interest
