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

How do bond traders typically make money from trading bonds?

By charging management fees to bond issuers

By earning interest payments (coupon payments) and capital gains from selling bonds at a higher price than they paid

By collecting transaction taxes on bond trades

By receiving dividends from the companies that issued the bonds

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Verified step by step guidance

Understand the primary ways bond traders make money: Bond traders earn through interest payments (coupon payments) and capital gains when they sell bonds at a higher price than their purchase price.

Clarify the concept of coupon payments: Bonds typically pay periodic interest, known as coupon payments, which represent a fixed percentage of the bond's face value. These payments are a source of income for bondholders.

Explain capital gains: Capital gains occur when a bond trader sells a bond for more than its purchase price. This can happen if market interest rates decrease, making existing bonds with higher coupon rates more valuable.

Differentiate bonds from stocks: Unlike stocks, bonds do not pay dividends. Dividends are payments made to shareholders by companies, whereas bonds provide interest payments to bondholders.

Eliminate incorrect options: Bond traders do not make money by charging management fees to bond issuers or collecting transaction taxes. These activities are unrelated to the primary ways bond traders earn income.