Question

Question 1
A legal document which summarizes the rights and privileges of bondholders as well as the obligations and commitments of the issuing company is called

A.a term bond.
B.a bond debenture.
C.trading on the equity.
D.a bond indenture.

Question 2
Bonds that are secured by real estate are termed

A.mortgage bonds.
B.serial bonds.
C.debentures.
D.bearer bonds.

Question 3
Bonds issued against the general credit of the borrower are called

A.callable bonds.
B.mortgage bonds.
C.debenture bonds.
D.sinking fund bonds.

Question 4
Bonds that may be exchanged for common stock at the option of the bondholders are called

A.convertible bonds.
B.callable bonds.
C.stock bonds.
D.options.

Question 5
Bonds that are subject to retirement at a stated dollar amount prior to maturity at the option of the issuer are called

A.early retirement bonds.
B.debentures.
C.callable bonds.
D.options.

Question 6
Bonds that have specific assets of the issuer pledged as collateral are

A.debenture bonds.
B.secured bonds.
C.callable bonds.
D.convertible bonds.

Question 7
The interest rate investors demand for loaning funds is the

A.market interest rate.
B.bond interest rate.
C.stated rate.
D.contractual interest rate.

Question 8
A corporation recognizes a gain or loss

A.only when bonds are converted into common stock.
B.only when bonds are redeemed before maturity.
C.when bonds are redeemed at or before maturity.
D.when bonds are converted into common stock and when they are redeemed before maturity.

  
Question 9
If there is a loss on bonds redeemed early, the

A.loss is debited to Interest Expense, as a cost of financing.
B.loss is debited directly to Retained Earnings.
C.bonds’ carrying value was less than the redemption price.
D.bonds’ carrying value was greater than the redemption price.

Question 10
A $495000 bond was retired at 98 when the carrying value of the bond was $490000. The entry to record the retirement would include a

A.loss on bond redemption of $5000.
B.gain on bond redemption of $5000.
C.loss on bond redemption of $4900.
D.gain on bond redemption of $4900.

Question 11
A $2100 face value bond with a quoted price of 98 is selling for

A.$98.
B.$2002.
C.$2100.
D.$2058.

Question 12
A bond with a face value of $520000 and a quoted price of 102.125 has a selling price of

A.$520585.
B.$531050.
C.$530465.
D.$624585.

Answer 1

Answer to Question 1, 2, 3:

Answer to Question 4, 5, 6 and 7: