Class notes--Chapter 10A_Accounting for bonds payable Flashcards
What is bonds payable
promise to repay a specified amount at a fixed future date, form of interest bearing note payable
why are bonds used
large amounts are dividend into smaller denominations
when are bonds payable
at maturity (term bonds)
or
at installment (Serial bonds)
where are bonds traded
publically on exchanges
what is coupon interest rate
rate determining the amount paid to investors
->specified on the bond, and it determines cash payments
what is market/effective interest rate/yield
rate investors demand for loaning funds at any given point in time
what are the two different interest rates
coupon rates
market rates
what value are bonds issued at (3)
1) at face value
2) below face value (Discont)
3) above face value (premium)
if market rate== coupon rate, bond is issues at what rate?
at par, or at face value
if market rate> coupon rate, bond is issues at what rate?
below face value/discount
if market rate<coupon rate, bond is issues at what rate?
above face value/premium
what is future value
the value paid at the end of the bond maturity
in a bond time line, what is the value paid at the end called
what is the value paid yearly called
waht is the time zero called
what is the time at the end called
face value/future value
coupon rate/annual interest payment (face value* coupon rate)
issue date
maturity date
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