Multiple Choice bdcki th provided with this exam. For Problems 26 and later, rec

Question

Multiple Choice bdcki th provided with this exam. For Problems 26 and later, record your answer on the exam work. You may use calculators on this exam. pa 1. Bonds differ from notes in the following way A) Bonds are listed as assets while notes are liabilities. B) Bonds are alwavs isued at par while notes can be issued at premiums or discounts © Bonds are listed as equity while notes are liabilities. D) Bonds pay interest each year while notes do not pay interest until maturit E) None of the above 2, A bondholder that owns a $1,000, 10%, 10-year bond has: A) Ownership rights. B) The right to receive $10 per year until maturity C) D) E) The right to receive $100 per year until maturity. The right to receive $10,000 at maturity. The right to receive dividends of $1,000 per year. 3. Carrying value of a bond is calculated as: A) B) C) D) Par value minus premium. Par value minus discount. Sum of the bond's interest payments. Par value times the bond interest rate. Par value times the market interest rate. 4. The cash components of bonds include: A) Annual interest payments B) Annual dividends. C) A repayment of the par value at maturity D) Both A and C. E) Both B and C.

Explanation / Answer

Ans 1. option E none of above

Ans 2. Option C ($1000*10% = $100 each year interest until maturity)

Ans 3. Option B

Ans 4. Option D (Annual interest payment and repayment at par at maturity)

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