21) Bonds in a particular issue which mature in installments over a period of time are called:
A) serial bonds.
B) term bonds.
C) callable bonds.
D) convertible bonds.
22) Bonds which are backed only by the good faith of the borrower are referred to as:
A) junk bonds.
B) uncertified bonds.
C) debenture bonds.
D) callable bonds.
23) If the market interest rate is greater than the stated interest rate on bonds, bonds will sell:
A) at face value.
B) at a discount.
C) at a premium.
D) at market value.
24) If bonds are issued at a discount, it means that the:
A) market interest rate is higher than the stated interest rate.
B) market interest rate is lower than the stated interest rate.
C) financial strength of the issuer is weak.
D) bond is convertible.
25) The market interest rate is also referred to as the:
A) contractual rate.
B) coupon rate.
C) effective rate.
D) stated rate.
26) The carrying amount of bonds issued at a discount is calculated by:
A) subtracting Discount on Bonds Payable from Bonds Payable.
B) subtracting the sum of Discount on Bonds Payable and Interest Payable from Bonds Payable.
C) subtracting Interest Payable from Bonds Payable.
D) subtracting Interest Expense from Bonds Payable.
27) The interest rate that investors require for loaning their money is referred to as:
A) the coupon rate of interest.
B) the market rate of interest.
C) the stated rate of interest.
D) the discount rate of interest.
28) Bonds with a 7% stated interest rate were issued when the market rate of interest was 6%. This bond was issued at:
A) par value.
B) a premium.
C) a discount.
D) face value.
29) If the market interest rate is 6%, a $10,000, 7%, 5-year bond, that pays interest semiannually would sell at an amount:
A) less than face value.
B) equal to face value.
C) greater than face value.
D) less than the maturity value.
30) A bond will sell at a premium when:
A) the coupon rate is equal to the effective rate.
B) the coupon rate is greater than the effective rate.
C) the coupon rate is less than the effective rate.
D) the stated rate is less than the market rate of interest.