1. If a 56,000, 10 percent, 10-year bond was issued at 104 on October 1, 2011, how much interest expense will accrue on December 31 if interest payments are made annually?
A) None
B) $144
C) $150
D) $500
2. The rate of interest that is printed on the bond is called the rate of interest.
A) stated
B) market
C) variable
D) maturity
3. By NOT accruing warranty expense:
A) reported liabilities will be overstated and net income will be understated.
B) reported expenses will be overstated and reported liabilities will be understated.
C) reported liabilities will be understated and net income will be overstated.
D) reported expenses will be understated and net income will be understated.
4. If the market rate of interest is greater than the bond's stated rate of interest, the bond will be issued at
A) a discount.
B) par.
C) a premium.
D) maturity value.
5. A $150,000 bond issue sold at 93.8 will cost.
A) whatever cost is negotiated.
B) $150,000.
C) $159,300.
D)$140,700.
6. A Convertible Bond
A) Mows the holder to trade the bond lot a set number Of common shares
B) Converts to a premium or discount at the date of sale
C) Converts the stated or coupon rate 10 the market rate of interest
D) Automatically becomes common stock at the maturity date
7. The Debt Ratio
A) Show what portion of the assets of a company are financed by owners
B) Indicates the company's ability to take on more debt
C) IS Calculated by dividing long term debt by Mal equity
D) Slows the return on all tong term liabilities
8. Bonds are issued by
A) Local government entities
B) Corporations
C) The federal government
D) All of the above
9. Bonds issued at a premium
A) WO decrease the interest expense of the company
B) Means the bond sold at a gain
C) Are more attractive to investors than a bend sold at face value
C) Will be redeemed before the maturity date
10. The debt ratio is calculated by dividing
A) Current liabilities by assets
B) Total Imbibes by total equity
C) Total liabilities by total assets
D) Current liabilities by net income