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 variables are required to calculate the value of a bond?

Face value, dividend yield, and number of shares outstanding

Market price, book value, and par value

Coupon rate, stock price, and earnings per share

Face value, coupon rate, market interest rate, and time to maturity

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Verified step by step guidance

Understand the concept of a bond: A bond is a fixed-income instrument representing a loan made by an investor to a borrower. Its value is determined by several key variables.

Identify the required variables: To calculate the value of a bond, the essential variables are Face Value (the principal amount to be repaid at maturity), Coupon Rate (the annual interest rate paid on the bond), Market Interest Rate (the prevailing rate in the market), and Time to Maturity (the remaining time until the bond matures).

Recognize the formula for bond valuation: The value of a bond is typically calculated using the Present Value (PV) of its future cash flows, which include periodic coupon payments and the repayment of the face value at maturity.

Break down the calculation process: To calculate the bond value, you need to compute the Present Value of the coupon payments using the formula \( PV = \frac{C}{(1 + r)^t} \), where \( C \) is the coupon payment, \( r \) is the market interest rate, and \( t \) is the time period. Then, calculate the Present Value of the face value using \( PV = \frac{FV}{(1 + r)^T} \), where \( FV \) is the face value and \( T \) is the time to maturity.

Combine the results: Add the Present Value of the coupon payments and the Present Value of the face value to determine the total bond value.