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

A bond with a face amount of $1,000 has a current price quote of 98.5. What is the bond's price?

$980.50

$1,000

$985

$1,085

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Verified step by step guidance

Step 1: Understand the concept of a bond price quote. A bond price quote is expressed as a percentage of the bond's face value. For example, a quote of 98.5 means the bond is priced at 98.5% of its face value.

Step 2: Identify the bond's face value from the problem. In this case, the face value is $1,000.

Step 3: Convert the price quote percentage into a decimal by dividing it by 100. For a quote of 98.5, the decimal equivalent is 98.5 ÷ 100 = 0.985.

Step 4: Multiply the bond's face value by the decimal equivalent of the price quote to calculate the bond's price. Use the formula: $ \text{Bond Price} = \text{Face Value} \times \text{Price Quote (Decimal)} $.

Step 5: Perform the multiplication: $ \text{Bond Price} = 1,000 \times 0.985 $. This will give you the bond's price.