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

In the context of bonds, a bond buyer is a:

Underwriter of the bond

Guarantor of the bond

Creditor to the bond issuer

Owner of the issuing company

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Verified step by step guidance

Understand the role of a bond buyer: A bond buyer is an individual or entity that purchases a bond issued by a company or government. By purchasing the bond, the buyer is essentially lending money to the issuer in exchange for periodic interest payments and the return of the principal amount at maturity.

Clarify the relationship between the bond buyer and the bond issuer: The bond buyer is considered a creditor to the bond issuer because they are providing funds to the issuer, who is obligated to repay the borrowed amount along with interest.

Differentiate the bond buyer from other roles: The bond buyer is not an underwriter, as underwriters are financial institutions that help the issuer sell bonds to investors. The bond buyer is also not a guarantor, as guarantors provide assurance that the bond issuer will fulfill its obligations. Additionally, the bond buyer does not become an owner of the issuing company, as bonds do not confer ownership rights like stocks do.

Review the terms of the bond agreement: The bond agreement specifies the interest rate, payment schedule, and maturity date, which are the terms under which the bond buyer lends money to the issuer.

Conclude the correct classification: Based on the explanation, the bond buyer is best described as a creditor to the bond issuer, as they are lending money and expecting repayment under the agreed terms.