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 true regarding secured and unsecured bonds?

Secured bonds are also known as debentures.

Unsecured bonds guarantee repayment through pledged assets.

Secured bonds are backed by specific assets of the issuer, while unsecured bonds are not backed by collateral.

Unsecured bonds have lower risk for investors compared to secured bonds.

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Verified step by step guidance

Understand the definitions of secured and unsecured bonds: Secured bonds are backed by specific assets of the issuer, meaning that if the issuer defaults, the pledged assets can be used to repay bondholders. Unsecured bonds, also known as debentures, are not backed by collateral and rely solely on the issuer's creditworthiness.

Analyze the statement 'Secured bonds are also known as debentures': This is incorrect because debentures refer to unsecured bonds, not secured bonds.

Evaluate the statement 'Unsecured bonds guarantee repayment through pledged assets': This is incorrect because unsecured bonds do not involve any pledged assets; they are backed only by the issuer's promise to pay.

Review the statement 'Secured bonds are backed by specific assets of the issuer, while unsecured bonds are not backed by collateral': This is correct because it accurately describes the distinction between secured and unsecured bonds.

Assess the statement 'Unsecured bonds have lower risk for investors compared to secured bonds': This is incorrect because unsecured bonds carry higher risk for investors due to the lack of collateral, whereas secured bonds are considered less risky because of the backing of specific assets.