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

The face amount of a bond is called the:

market value

discount rate

coupon rate

par value

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Verified step by step guidance

Understand the concept of a bond: A bond is a fixed-income instrument that represents a loan made by an investor to a borrower, typically corporate or governmental.

Learn the definition of 'face amount' or 'par value': The face amount (or par value) of a bond is the amount the issuer agrees to repay the bondholder at maturity. It is the nominal value of the bond.

Differentiate between the given options: Market value refers to the current price of the bond in the market, discount rate is the interest rate used to calculate the present value of future cash flows, and coupon rate is the annual interest rate paid on the bond's face value.

Recognize that the face amount is not influenced by market fluctuations or interest rates; it is fixed and represents the principal amount of the bond.

Conclude that the correct term for the face amount of a bond is 'par value,' as it is the amount repaid to the bondholder at maturity.