Below on the left is a list of bond classifications and terms. Match each item in the list with the statement on the right by selecting the appropriate statement from the dropdown list.

Convertible Bonds

[ Choose ] The interest rate that is used to calculate the amount of interest to be paid each interest period The investor has the option of turning in the bond for retirement before maturity date The principal is paid off in steps (installments). The entire bond issue matures at a single date Unsecured bonds Interest is paid only to owners of record as reflected in the accounts of the issuer The interest rate that is used to calculate the amount of interest expense each interest period An alternative name for this type of bond is bearer bond Bonds that may be turned in to the issuer in exchange for other securities Interest is paid only in years when the issuer earns a profit

Coupon Bonds

[ Choose ] The interest rate that is used to calculate the amount of interest to be paid each interest period The investor has the option of turning in the bond for retirement before maturity date The principal is paid off in steps (installments). The entire bond issue matures at a single date Unsecured bonds Interest is paid only to owners of record as reflected in the accounts of the issuer The interest rate that is used to calculate the amount of interest expense each interest period An alternative name for this type of bond is bearer bond Bonds that may be turned in to the issuer in exchange for other securities Interest is paid only in years when the issuer earns a profit

Debentures

[ Choose ] The interest rate that is used to calculate the amount of interest to be paid each interest period The investor has the option of turning in the bond for retirement before maturity date The principal is paid off in steps (installments). The entire bond issue matures at a single date Unsecured bonds Interest is paid only to owners of record as reflected in the accounts of the issuer The interest rate that is used to calculate the amount of interest expense each interest period An alternative name for this type of bond is bearer bond Bonds that may be turned in to the issuer in exchange for other securities Interest is paid only in years when the issuer earns a profit

Effective interest rate

[ Choose ] The interest rate that is used to calculate the amount of interest to be paid each interest period The investor has the option of turning in the bond for retirement before maturity date The principal is paid off in steps (installments). The entire bond issue matures at a single date Unsecured bonds Interest is paid only to owners of record as reflected in the accounts of the issuer The interest rate that is used to calculate the amount of interest expense each interest period An alternative name for this type of bond is bearer bond Bonds that may be turned in to the issuer in exchange for other securities Interest is paid only in years when the issuer earns a profit

Income Bonds

[ Choose ] The interest rate that is used to calculate the amount of interest to be paid each interest period The investor has the option of turning in the bond for retirement before maturity date The principal is paid off in steps (installments). The entire bond issue matures at a single date Unsecured bonds Interest is paid only to owners of record as reflected in the accounts of the issuer The interest rate that is used to calculate the amount of interest expense each interest period An alternative name for this type of bond is bearer bond Bonds that may be turned in to the issuer in exchange for other securities Interest is paid only in years when the issuer earns a profit

Nominal interest rate

[ Choose ] The interest rate that is used to calculate the amount of interest to be paid each interest period The investor has the option of turning in the bond for retirement before maturity date The principal is paid off in steps (installments). The entire bond issue matures at a single date Unsecured bonds Interest is paid only to owners of record as reflected in the accounts of the issuer The interest rate that is used to calculate the amount of interest expense each interest period An alternative name for this type of bond is bearer bond Bonds that may be turned in to the issuer in exchange for other securities Interest is paid only in years when the issuer earns a profit

Redeemable Bonds

[ Choose ] The interest rate that is used to calculate the amount of interest to be paid each interest period The investor has the option of turning in the bond for retirement before maturity date The principal is paid off in steps (installments). The entire bond issue matures at a single date Unsecured bonds Interest is paid only to owners of record as reflected in the accounts of the issuer The interest rate that is used to calculate the amount of interest expense each interest period An alternative name for this type of bond is bearer bond Bonds that may be turned in to the issuer in exchange for other securities Interest is paid only in years when the issuer earns a profit

Registered Bonds

[ Choose ] The interest rate that is used to calculate the amount of interest to be paid each interest period The investor has the option of turning in the bond for retirement before maturity date The principal is paid off in steps (installments). The entire bond issue matures at a single date Unsecured bonds Interest is paid only to owners of record as reflected in the accounts of the issuer The interest rate that is used to calculate the amount of interest expense each interest period An alternative name for this type of bond is bearer bond Bonds that may be turned in to the issuer in exchange for other securities Interest is paid only in years when the issuer earns a profit

Serial Bonds

[ Choose ] The interest rate that is used to calculate the amount of interest to be paid each interest period The investor has the option of turning in the bond for retirement before maturity date The principal is paid off in steps (installments). The entire bond issue matures at a single date Unsecured bonds Interest is paid only to owners of record as reflected in the accounts of the issuer The interest rate that is used to calculate the amount of interest expense each interest period An alternative name for this type of bond is bearer bond Bonds that may be turned in to the issuer in exchange for other securities Interest is paid only in years when the issuer earns a profit

Term Bonds

a) what is the effective rate of interest

b) what is the nominal rate of interest

SHOW WORK

KC Corporation issued bonds with a total par value of $100,000 on 1/1/20x1. The following loan amortization schedule was developed for these bonds.. Beginning Carrying Interest Amortization Value Year Cash 20x1 96,613 6,763 6,000 763 20x2 97,376 6,816 6,000 816 20x3 98,192 6,873 6,000 873 20x4 99,065 6,935 935 6,000 27,387 Column Totals 24,000 3,387