Chapter 10 Flashcards
1
Q
stated investment rate (face value)
A
the rate stated on the bond as issued
2
Q
bonds
A
an obligation to pay a certain amount at a certain time, interest-bearing (long-term liability)
3
Q
amortization
A
the amount of money you have over/under the bond value
4
Q
covenance
A
a restriction to protect the bondholder
5
Q
Discount
A
less than the par value
6
Q
Premium
A
more than the par value
7
Q
Bond maturity
A
the life of the bond
8
Q
effective interest rate
A
Interest expense/face value
9
Q
interest
A
principal * rate * life
