Table of contents

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

Which of the following statements is NOT true regarding a bond's nominal yield?

The nominal yield does not take into account the bond's current market price.

The nominal yield is the annual interest rate stated on the bond certificate.

The nominal yield changes as market interest rates fluctuate.

The nominal yield is also known as the coupon rate.

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Verified step by step guidance

Understand the concept of nominal yield: The nominal yield, also known as the coupon rate, is the annual interest rate stated on the bond certificate. It represents the fixed percentage of the bond's face value that the issuer agrees to pay annually as interest.

Clarify the relationship between nominal yield and market price: The nominal yield does not change based on the bond's current market price. It is fixed and determined at the time the bond is issued.

Examine the impact of market interest rates on nominal yield: The nominal yield remains constant and does not fluctuate with changes in market interest rates. Market interest rates affect the bond's market price and yield to maturity, but not the nominal yield.

Review the definition of coupon rate: The nominal yield is synonymous with the coupon rate, which is the fixed interest rate stated on the bond certificate.

Identify the incorrect statement: Based on the above clarifications, the statement 'The nominal yield changes as market interest rates fluctuate' is NOT true, as the nominal yield is fixed and does not change with market conditions.