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

Which of the following statements about a bond's face value is true?

The face value is the same as the bond's current market price.

The face value is the total amount of interest paid over the life of the bond.

The face value determines the bond's coupon rate.

The face value is the amount the issuer agrees to pay the bondholder at maturity.

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Verified step by step guidance

Understand the concept of a bond's face value: The face value, also known as the par value, is the amount the bond issuer agrees to repay the bondholder at the bond's maturity date. It is typically stated on the bond certificate.

Clarify the difference between face value and market price: The face value is fixed and does not change, whereas the market price fluctuates based on market conditions, interest rates, and the creditworthiness of the issuer.

Explain the relationship between face value and interest payments: The face value is used to calculate the bond's coupon payments (interest payments). The coupon rate is applied to the face value to determine the periodic interest payment.

Highlight the role of face value at maturity: At the bond's maturity, the issuer repays the bondholder the face value, regardless of the bond's market price at that time.

Conclude with the correct statement: The face value is the amount the issuer agrees to pay the bondholder at maturity, which is distinct from the bond's market price or total interest paid over its life.