ate statements about E15-1 Nick Bosch has prepared the following list of stateme

Question

ate statements about E15-1 Nick Bosch has prepared the following list of statements about bonds. 1. Bonds are a form of interest-bearing notes payable. 2. Secured bonds have specific assets of the issuer pledged as collateral for the bonds. 3. Secured bonds are also known as debenture bonds 4. A conversion feature may be added to bonds to make them more attractive to bond buyers. 5. The rate used to determine the amount of cash interest the borrower pays is called the stated rate. 6. Bond prices are usually quoted as a percentage of the face value of the bond. 7. The present value of a bond is the value at which it should sell in the marketplace. Instructions Identify each statement as true or false. If false, indicate how to correct the statement.

Explanation / Answer

1. Bonds are a form of interest bearing notes payable – True

2. Secured bonds have specific assets of issuer pledge as collateral for the bonds – True

3. Secured bonds are also known as debenture bonds – False

      Unsecured bonds are known as debenture bonds

4. A conversion feature may be added to bonds to make them more attractive to bond buyers.- True

5. The rate used to determine the amount of cash interest of borrower pays is called the stated rate.     True

6. Bond prices are usually quoted as a percentage of face value of the bond. True

7 The present value of the bond is the value at which it should sell in marketplace. True     

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