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 one of the following correctly defines a bond feature?

The yield to maturity is the amount paid as interest each period.

The face value is the current market price of the bond.

The maturity date is the date when the bond is first issued to investors.

The coupon rate is the annual interest rate paid by the bond issuer to the bondholder.

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Verified step by step guidance

Step 1: Understand the key terms related to bonds. A bond is a fixed-income security that represents a loan made by an investor to a borrower. Key features of a bond include the coupon rate, face value, yield to maturity, and maturity date.

Step 2: Define the 'coupon rate.' The coupon rate is the annual interest rate that the bond issuer agrees to pay the bondholder. It is expressed as a percentage of the bond's face value.

Step 3: Clarify the 'yield to maturity.' The yield to maturity (YTM) is the total return an investor can expect to earn if the bond is held until it matures. It is not the periodic interest payment.

Step 4: Explain the 'face value.' The face value (or par value) is the amount the bondholder will receive from the issuer at maturity. It is not the current market price of the bond.

Step 5: Define the 'maturity date.' The maturity date is the date on which the bond issuer repays the face value to the bondholder. It is not the date the bond is first issued.