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 is a common characteristic or provision of bonds?

No stated interest rate or coupon payments

Unlimited maturity period with no repayment date

Mandatory conversion into equity at maturity

Callable feature, allowing the issuer to redeem the bond before maturity

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Verified step by step guidance

Understand the concept of bonds: Bonds are debt instruments issued by entities (corporations, governments, etc.) to raise funds. They typically have a stated interest rate (coupon rate), a maturity date, and provisions or features that may vary depending on the bond type.

Review the callable feature: A callable bond is a type of bond that allows the issuer to redeem (or 'call') the bond before its maturity date. This is typically done when interest rates drop, allowing the issuer to refinance the debt at a lower cost.

Eliminate incorrect options: Analyze the other options provided in the question. For example, bonds usually have a stated interest rate or coupon payments, a defined maturity period, and are not typically mandatorily converted into equity unless they are convertible bonds with specific provisions.

Focus on the correct characteristic: The callable feature is a common provision in bonds, as it provides flexibility to the issuer to manage their debt obligations efficiently.

Conclude the reasoning: Based on the analysis, the correct answer is the callable feature, as it is a standard characteristic found in many bonds, allowing issuers to redeem the bond before maturity under certain conditions.