Match each term with the correct definition. a. Contingency b. Discount c. Premi
ID: 2433333 • Letter: M
Question
Match each term with the correct definition.
a.
Contingency
b.
Discount
c.
Premium
d.
Capital lease
e.
Stated rate
f.
Effective rate
1. Another name for thereal rate
2. The annual interest ratepaid to the bondholders
3. A lease that is for mostof the useful life of the lease resource and which gives the firmcontrol of the resource as if it had been purchased.
4. An existing conditionthat may result in an economic effect if a future event occurs
5. When the real rate ishigher than the stated rate, bonds will sell at this
6. When the real rate islower than the stated rate, bonds will sell at this
a.
Contingency
b.
Discount
c.
Premium
d.
Capital lease
e.
Stated rate
f.
Effective rate
Explanation / Answer
a. Contingency 4. Anexisting condition that may result in an economic effect if afuture event occurs b. Discount 5. Whenthe real rate is higher than the stated rate, bonds will sell atthis c. Premium 6.When the real rate is lower than the stated rate, bonds will sellat this d. CapitalLease 3. Alease that is for most of the useful life of the lease resource andwhich gives the firm controlof the resource as if it had been purchased. e. StatedRate 2. The annual interest rate paid to the bondholders f. EffectiveRate 1. Another name for the real rate
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