Chapter 10 Terminology

Question 1

A ________ is its issuers written promise to pay the par value w/ interest

Answer 1

Bond

Question 2

The _____________ is paid at a stated future date called the maturity date.

Answer 2

Par value of a bond

Question 3

The legal contract between the issuer and the bond-holders is called the _______.

Answer 3

Bond indenture

Question 4

Evidence of the companies debt

Answer 4

Bond certificate

Question 5

The bond issuer pays the bond interest rate called the:

Answer 5

Contract rate

Question 6

The bonds ____________ of interest is the rate that borrowers are willing to pay and lenders are willing to accept for a bond and it’s risk level.

Answer 6

Market rate

Question 7

A ___________ occurs when a company issued bonds with a contract rate less than the market rate.

Answer 7

Discount on bonds payable

Question 8

_________ allocates equal bond interest expense to each interest period.

Answer 8

Straight-line bond amortization

Question 9

The amount by which the bond price exceeds par value is the:

Answer 9

Premium on bonds

Question 10

A _________ is a legal agreement that helps protect a lender if a borrower does not make required payments on notes or bonds.

Answer 10

Mortgage