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

A bondholder that owns a $1,000, 10\%, 10-year bond has:

Ownership of $1,000 in company stock.

The right to receive $100 in interest each year for 10 years, plus $1,000 at maturity.

A bond that matures in 1 year with a 10\% interest rate.

The obligation to pay $100 in interest each year for 10 years.

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Verified step by step guidance

Step 1: Understand the nature of a bond. A bond is a debt instrument issued by a company or government to raise funds. The bondholder is essentially lending money to the issuer and is entitled to periodic interest payments (coupon payments) and the repayment of the principal amount at maturity.

Step 2: Analyze the bond details provided. The bond has a face value of $1,000, a coupon rate of 10%, and a maturity period of 10 years. The bondholder owns this bond, meaning they are entitled to the benefits associated with it.

Step 3: Calculate the annual interest payment (coupon payment). The formula for calculating the coupon payment is: $ \text{Coupon Payment} = \text{Face Value} \times \text{Coupon Rate} $. Substituting the values: $ \text{Coupon Payment} = 1000 \times 0.10 $. This gives the annual interest payment.

Step 4: Determine the total interest payments over the bond's life. Since the bond matures in 10 years, the bondholder will receive the annual interest payment for 10 years. Multiply the annual interest payment by the number of years: $ \text{Total Interest Payments} = \text{Coupon Payment} \times \text{Years to Maturity} $.

Step 5: Understand the maturity payment. At the end of the 10-year period, the bondholder will receive the face value of the bond ($1,000) in addition to the interest payments received over the bond's life. This is the repayment of the principal amount.