Table of contents

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1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

11. Long Term Liabilities

Introduction to Bonds and Bond Characteristics

Financial Accounting

11. Long Term Liabilities

Introduction to Bonds and Bond Characteristics

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Multiple Choice

What does a bond's rating reflect?

The market price of the bond

The maturity date of the bond

The creditworthiness of the bond issuer

The interest rate paid by the bond

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Understand that a bond's rating is an assessment provided by credit rating agencies (e.g., Moody's, S&P, Fitch) to evaluate the creditworthiness of the bond issuer.

Recognize that creditworthiness refers to the issuer's ability to meet its financial obligations, specifically the timely payment of interest and repayment of the bond's principal.

Note that a higher bond rating (e.g., AAA) indicates a lower risk of default, while a lower rating (e.g., BB or below, often referred to as 'junk bonds') indicates a higher risk of default.

Clarify that the bond's rating does not directly reflect the market price, maturity date, or interest rate, although these factors can be influenced by the rating indirectly.

Conclude that the correct answer is 'The creditworthiness of the bond issuer,' as this is the primary purpose of a bond's rating.