F4 - Bonds (Andrew) Flashcards

1
Q

Use excel for the bonds, but use this chart format in columns:

A

Cash / Int / Amort /CV

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2
Q

For the CASH column remember its called INT PAYABLE it stays the same every period and you solve it by:

A

FACE VALUE X Contractual(stated rate)

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3
Q

For the INT column remember its called INT EXPENSE cv changes so new number everytime and you solve it by:

A

CV X effective rate(mkt rate/yield rate)

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4
Q

TIP: Focus on DATES

A
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5
Q

Straight line ammortization -

A

higher in at the beg. but at the end it makes NO IMPACT

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6
Q

In a DISCOUNT bond INT Expense(column) is ,…

A

higher than cash payment (column)

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7
Q

For the AMMORT column you solve it by:

A

By subtracting int payable - int exepnse or cash column - int column

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8
Q

For the CV column you solve it by

A

Beg CV +/- Ammort and then keep using the newest CV to subtract from

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9
Q

In a discount bond you add or subtract to CV?

A

You add the ammort to CV

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10
Q

In a premium bond you add or subtract to CV?

A

You subtract the ammort to CV

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11
Q

Redeemed bonds JE is?

A

DR - BP (original)
DR - Loss on debt extinguishment
CR - Cash (BP X %)
CR - Discount BP + issuanc cost

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