1. (1) Define liabilities. Identify several characteristics that distinguish liabilities from owners' equity. 2. (5) A friend of your just purchased a small tract of land and has taken out a $50,000, 11 percent mortgage, payable at $476.17 per month. After making first monthly payment he received a receipt from the bank stating that only $17.84 of the $476.17 had been applied to reducing the principal amount of the loan. Your friend computes that, at the rate of $17.84 per month, it will take over 233 years to pay off the $50,000 mortgage. Do you agree with your friend's analysis? Explain 3. (6) Briefly explain the income tax advantage of raising capital by issuing bonds rather than by selling capital stock. 4. (8) Why do bond prices vary inversely with interest rates? 5. (12) What is the meaning of the term loss contingency? Give several examples. How are loss contingencies presented in financial statements? Explain