Question
Fill in items 1 through 14 with the best answer provided in items A through N below. Use each letter only once. ____ 1. Bond
Fill in items 1 through 14 with the best answer provided in items A through N below. Use each letter only once.
____ 1. Bond indenture ____ 8. Premium on bonds
____ 2. Coupon bonds ____ 9. Callable bonds
____ 3. Discount on bonds ____ 10. Serial bonds
____ 4. Market interest rate ____ 11. Debenture bonds
_____ 5. Face value ____ 12. Issue price
____ 6. Convertible bonds ____ 13. Zero-coupon bonds
____ 7. Mortgage bonds ____ 14. Face interest rate
A. | The bond contract that sets forth the specific elements of the agreement, including the loan amount, referred to as the face value, or par value, of the bond; the interest rate; and the maturity date. |
B. | The amount to be paid at maturity. Also called par value. |
C. | Bonds that are not backed by specific collateral but are based on the general creditworthiness of the company. |
D. | Bonds that are backed by specific collateral. These bonds may be referred to as secured bonds. |
E. | Bonds that bear coupons for each interest payment. When an interest payment is due, the bondholder removes the applicable coupon and presents it to a bank for payment. |
F. | Bonds that do not require periodic interest payments and instead promise to pay a fixed amount at the maturity date. |
G. | Bonds that the investor can exchange for stock at a specified conversion rate. |
H. | Bonds that can be retired by the issuer for a specified price before their maturity date. |
I. | Bonds issued on the same date that have differing maturity dates. |
J. | The rate of interest to be paid to bondholders each period, as specified in the bond indenture. Also called coupon rate or stated rate. |
K. | The rate of interest used for present value calculations in valuing the bond. |
L. | The present value of the cash flows for the bond. |
M. | The excess of face value over issue price. |
N. | The excess of issue price over face value. |
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