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

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

Which of the following best describes the terms of the convertible notes that Tesla raised in May 2013?

They were 5-year and 7-year convertible notes with interest rates of 1.5% and 2.25%, respectively, convertible into Tesla common stock.

They were 10-year bonds with a fixed interest rate of 5%, not convertible into equity.

They were preferred shares with a 6% dividend, convertible into Tesla bonds.

They were short-term commercial papers with a maturity of 1 year and no conversion feature.

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Verified step by step guidance

Understand the concept of convertible notes: Convertible notes are a type of debt instrument that can be converted into equity (common stock) at a later date, typically under predefined conditions.

Analyze the terms provided in the question: The question mentions different financial instruments and their characteristics, such as convertible notes, bonds, preferred shares, and commercial papers.

Focus on the details of the convertible notes raised by Tesla in May 2013: The correct description includes the terms '5-year and 7-year convertible notes with interest rates of 1.5% and 2.25%, respectively, convertible into Tesla common stock.'

Compare the other options: Evaluate why the other options do not match the description of convertible notes. For example, 10-year bonds with a fixed interest rate of 5% are not convertible into equity, preferred shares with a 6% dividend are convertible into bonds, and short-term commercial papers have no conversion feature.

Conclude by identifying the correct description based on the characteristics of convertible notes and the details provided in the question.