A debt that requires the borrower to make equal periodic payments to the lender for the term of the note.

Flashcard- Chapter 12 Long-term Liabilities

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Business
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University
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Hard
Qing Kovarik
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9 questions
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1.
FLASHCARD QUESTION
Front
Back
What is an installment note?
2.
FLASHCARD QUESTION
Front
What is a mortgage note?
Back
A note that is secured by an asset.
3.
FLASHCARD QUESTION
Front
The underlying contract between the company issuing bonds and the bondholders.
Back
What is a bond indenture?
4.
FLASHCARD QUESTION
Front
What factors affect the proceeds received from issuing bonds?
Back
The face amount of the bonds, the interest rate on the bonds, and the market rate of interest for similar bonds.
5.
FLASHCARD QUESTION
Front
What is the contract rate or coupon rate?
Back
The interest rate to be paid on the face amount of the bond.
6.
FLASHCARD QUESTION
Front
What is the market rate of interest?
Back
The rate determined from sales and purchases of similar bonds, also called the effective rate of interest.
7.
FLASHCARD QUESTION
Front
What happens if the market rate equals the contract rate?
Back
Bonds will sell at the face amount.
8.
FLASHCARD QUESTION
Front
What happens if the market rate is greater than the contract rate?
Back
The bonds will sell for less than their face value, and the difference is called a discount.
9.
FLASHCARD QUESTION
Front
What happens if the market rate is less than the contract rate?
Back
The bonds will sell for more than their face value, and the difference is called a premium.
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